Those words start the 2002 Western Washington SBA guide for small businesses. What follows is 38 pages of advice and the first chapter is on loans. They know what’s usually on the minds of those starting up or expanding a business.

Scott Harvey knows this as well. As the SBA department manager for Kitsap Bank he has helped hundreds of dreams flourish.

Last year most of the loans Harvey approved were between $100,000 and $150,000 with a mean average of $255,000. Overall, he said, 75 percent of loans were to existing businesses.

Start-up loans are harder to earn if only because there’s no proven track record of success. Banks don’t make many new business loans anymore unless they are backed by an SBA guaranty bond. For banks, that bond means the Small Business Administration will accept the risk for 75 percent of the loan.

“A lot of banks do make loans to start-up business, but indirectly,” he said jokingly. “They’re called home equity loans.”

Over and over again throughout SBA literature the question is asked: Is entrepreneurship for you.

There’s a reason.

“Too often people are just flakes,” Harvey said. “That plays to a critical issue of character.”

Harvey said lenders look for total commitment in a future enterprise.

“People will often say they want a loan but don’t want to risk their personal real estate,” he said. People have come back to thank him for making that a requirement. After his business got out of a rocky start, one person told Harvey: “The only reason I’m still in business is because you had my house. I couldn’t go back and tell my wife I’d lost the house.’”

Besides lack of commitment, other reasons for being turned away are: inadequate cash flow, a long-term pattern of poor credit responsibility, and lack of sufficient collateral. Harvey said he denies about 60 percent of loan requests, but encourages many to come back with a third year of profit or more capital.

Those who are approved get the loan in about four to six weeks.

The benefits of an SBA loan include: longer terms; little or no down when purchasing assets; borrowing beyond collateral; and it allows people who might be turned away for what Harvey calls “credit challenges.”

“If you have those challenges make sure it’s all in writing and out on the table,” Harvey said. “Don’t make the lender look for it.”

He said people who want to borrow money are getting smarter about it. He rarely has conversations any longer that begin with: “If I made a profit last year I wouldn’t need to borrow money.”

“People don’t start with enough capital and they can’t ride out the tough times.”

Harvey tips his hat to anyone who takes his or her idea and runs with it.
“People don’t realize how hard it is,” he said. “I don’t think I could run a business myself. Small business owners are a different breed. I have a lot of respect for them.”

(Editor’s Note: Temple A. Stark is a free-lance writer living in Port Orchard. Reach him at writer@harbornet.com.).