The WBENC LIFT WBE Financial Readiness Series has come to a close with our third and final session, Access to Capital Thursday brought to you by Bridge. Stay tuned for a full recap of the entire June 2024 series and learn more below about this enlightening session.

Moderator Rohit Mathur, CEO of Bridge was joined by Jack Green, Executive Vice President and Chief Lending Officer of Adelphi Bank, and Aileen Berrios, Executive Vice President and Director of Business Solutions and Development Group from 5Star Bank to share insights on the loan process, credit, and funding options for women-owned and small businesses.

The session began with our panelists emphasizing the importance of building a strong relationship with a bank before you need funding. Remarking, it’s often easier to get funding when you don’t need it because your financials are often in a stronger position. For example, starting with a line of credit is a great tool to help ensure your liquidity as you grow your business.

Our panelists shared the factors that most impact an applicant’s ability to qualify for a line of credit, explaining that while the size of your business and years in business are factors in the approval process, qualifying for a line of credit will typically come down to your revenue, with the loan amount for a line of credit usually totaling around 10% of your total revenue.

Jack Green and Aileen Berrios continued the session sharing why banks ask for collateral or a personal guarantee, noting that whether they take the form of your accounts receivable, equipment, real estate, or personal assets, banks need to know that you as a business owner have skin in the game before lending to you.

Both noted the importance of viewing your bank as a lender, not an investor, one who needs assurances that you are committed to your business and likely to repay your loan. Our panelists clarified that banks have little to no interest in collecting on your collateral or personal guarantee and would much prefer to help you reach your full growth potential and continue working with them.

Continuing our session, our panelists discussed how credit can impact your ability to access bank financing, explaining there are three important factors when determining your credit worthiness: your business income, your balance sheet and financial statements, as well as your collateral. When making a lending decision, banks evaluate each of these factors. For example, if a business owner applied for a loan and had a weak credit score but had strong cash flow and collateral they may still be able to qualify for a loan, noting that it is the lenders job to take your entire financial picture into consideration when making a lending decision. When it comes to building your business credit, our panelists highlighted that Dun & Bradstreet offers a free resource to help you understand your business credit.

To close out our session, our panelist shared some alternative funding options outside of traditional banks, specifically microlending opportunities through Small Business Development Centers (SBDC) and CDFI loan funds, that can be particularly valuable for early stage businesses.

Accessing capital is part of the business lifecycle. It’s a journey, not a single destination. Understanding your financials and funding options and building a strong relationship with your capital partners will help you secure the funding you need to grow and scale your business.

WBENC LIFT Financial Center of Excellence is an integrated education and funding program for women entrepreneurs to provide comprehensive financial support and resources, including education, coaching, networking and funding opportunities.