Business loans: In the tough economy, more lenders than ever are looking at small business plans

The economic recession has affected the way lenders view potential borrowers, but the U.S. Small Business Administration is trying to help on both sides of the lending process, says Bill Vickery, area manager for the SBA in Cape Girardeau.

"I don't know that the rules and regulations have changed so much as the overall underwriting guidelines. That's where we come into play," says Vickery. The American Reinvestment and Recovery Act of 2009 included two items to help lenders and borrowers: up to a 90 percent guarantee on loans in case of default and waived fees on SBA-backed loans. Since then, about $28 billion has gone toward lending to about 70,000 small business owners nationwide, says Vickery. About 1,300 lenders who were not participating in SBA programs before are now involved.

Vickery explains that the new items are meant to help small business owners who don't have as much collateral as desired by the lender, or small business startups that don't have the "track record" a lender would prefer.

"Lenders are always looking for good loans. I think as the economy improves, cash flow and balance sheets will improve and make borrowers more attractive to lenders," says Vickery. "It's not really the lenders so much that are making the calls ... but individual business owners will see their positions improve as sales increase and as profits increase."

For now, it's even more important for small business owners to do their research and come up with a solid business plan before approaching a lender.

"Ten years ago, business plans were not required for loans, but today, about every lender wants to see a business plan from the borrower," says Vickery. "It's not the plan itself -- but the process that business owners go through as they gather that information and use it as a master tool for the business -- that's important," he adds. "It gives lenders a blueprint for what the business is and what it does, and its future plans and needs."