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Janice France-Pettit: Financing options for minorities

Union Bank

Posted: August 27, 2010 8:08 p.m.
Updated: August 28, 2010 4:55 a.m.
 

Did you know that many banks have special financing options designed for woman-, minority- and veteran-owned businesses?

Whether you are seeking a small-business loan to start a new venture or to expand or improve your existing business, you can find funding for your woman-, minority- or veteran-owned business from several sources. Steps should be taken to increase your chances of getting a loan. Taking the time to gather documents that highlight your prior successes can help make your business a more appealing loan candidate.

“Union Bank positions itself as a partner. Small businesses are important to us,” said Union Bank Regional Executive Leticia Aguilar. “If you do not qualify, we will refer you to local, community-based organizations that can help educate nonqualified businesses and help them become bankable in the future. We want to help you succeed. Small businesses are the backbone of the community.”

The following are some financing options to assist woman-, minority- and veteran-owned businesses:

Loans
With interest rates at historic lows, this may be an excellent time to finance your businesses’ growth through a loan, especially via a loan program designed for woman-, minority- or veteran-owned businesses, which may offer more flexible underwriting to help you reach your business goals. A traditional loan may work best for the purchase of assets such as vehicles or equipment. Business owners can select from a secured or unsecured loan.

Lines of credit
Small-business owners may request lines of credit when they need immediate cash for seasonal purchases, short-term working capital or other urgent business needs. A line of credit will allow you to write a check or transfer funds to cover all your business expenses without reducing your existing cash. In return, you will likely have to pay monthly fees or interest fees. There are several types of lines of credit available, so refer to your banker or financial advisor to help you decide the best option. 

Government-backed loans
 Consider investigating loans backed by the Small Business Association. The most popular loans backed by the association are the 7(a) Loan Program and the CDC/504 Loan Program. The 7(a) Loan allows business owners to apply for up to $750,000 of capital to use toward business needs such as purchasing new equipment or expanding your business. The CDC/504 Loan program is designed to aid business owners with the purchase of assets such as buying property. Generally, the loan amount for a CDC/504 is around $1 million or more, depending on your business needs.

Some financial intuitions have a preferred lender status with the Small Business Association to make the loan process move along faster. You can refer to www.SBA.gov to get information on their preferred lenders and the loans backed by the Small Business Association.

In the state of California, the California Capital Access Program offers loans that can be used to finance the acquisition of land, construction or renovation of buildings, the purchase of equipment, other capital projects and working capital. This loan helps California small businesses with 100 or fewer employees. Refer to your banker or visit www.SBA.gov to keep up to date on the latest government funding options available.

Even though the process of obtaining financing for your business can seem like an overwhelming task, you may find that taking time to research your options can help make it less stressful. Also, finding a lender who is willing to work with you and help keep you informed on all the financing options available for woman-, minority- or veteran-owned businesses may help the loan process go quicker.

Janice France-Pettit is a senior vice president and regional manager for Union Bank, overseeing the Simi Valley, Santa Clarita Valley, San Fernando Valley and Antelope Valley regions and providing services for many of the bank’s Priority Banking clients. Her column represents her own views and not necessarily those of The Signal. The foregoing article is intended to provide general information about woman-, minority- and veteran-owned businesses and is not considered financial or tax advice from Union Bank.  Please consult your financial or tax advisor.

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