Obtaining a business loan can be a challenging task. There are a number of
resources, however, that can aid entrepreneurs in their quest to obtain capital.

“Consultative resources can help entrepreneurs effectively develop a plan for their
business,” says Thomas FitzGibbon, executive vice president for MB Financial Bank in

Smart Business spoke with FitzGibbon
about what type of resources are available,
how they can best be utilized and the
advantages of working with a bank that can
underwrite and process loans locally.

What are some challenges that an entrepreneur might face when seeking bank

The first challenge is that the entrepreneur must be prepared for a loan application. They need to have a business plan, a
financial plan and a marketing plan that
effectively creates a story that a banking
institution can buy into. Entrepreneurs, by
nature, are idea people, not necessarily
financial gurus. They need to find a way in
which they can translate their idea into a
story that enables the lender to effectively
underwrite the opportunity. A key word
when talking about bank financing is translation: translating the idea or concept of a
business promotion activity into a story
that has both a financial look as well as an
effective marketing strategy.

What types of resources are available to
help entrepreneurs with the process?

SBA-supported and local business-supported organizations, often referred to as
Small Business Development Centers, or
SBDCs, and a variety of state agencies
across the country provide operating support for organizations that help entrepreneurs prepare applications, business plans
and marketing and financial plans.

Entrepreneurs need good financial guidance. Skilled professionals, such as
accountants and attorneys, can help them
access the appropriate resources. Also, in
many cases, banking institutions sponsor
and work with Small Business Development Centers and other entrepreneurial support institutions. For example, we
work with ACCION Chicago. Such partnerships between community-based institutions help entrepreneurs align themselves
with the resources that can help them be
successful as well as help them through
lending programs so they can obtain the
capital necessary for them to start their

What type of credit-enhancement resources
can be used to help obtain a loan?

There are state programs and, in some
cases, municipal programs that can provide the credit enhancement necessary to
reduce the risk. For instance, in the state of
Illinois, the Department of Commerce and
Economic Opportunity will participate in a
loan that a local depository would originate; in other words, it will take a secondary position on the loan and in effect the
lender gets paid back first. The state of
Illinois also has a program called the
Community Access Program, or CAP, that
provides a credit enhancement by virtue of
establishing a loan loss reserve. Both the
SBA’s 504 Program and 7(a) Program are
extremely good programs.

What are the advantages of working with a
bank that has local underwriting and processing capabilities?

You’re able to deal with people that are
making decisions right there rather than in
some other part of the country. You are
going to get more of a local view of the
business potential, and you will have the
opportunity to present alternative scenarios. Larger banking institutions are less
likely than local institutions to look at finding alternative credit criteria, such as creating longer terms or establishing different
collateral requirements.

How can entrepreneurs benefit from a relationship with a banking partner that can
provide a single point of contact for loans,
investments and resources?

Large banks tend to be more transactional in nature with entrepreneurs while local
institutions and community banks tend to
have more of a relationship feel. If I have
your company in my portfolio and you are
making widgets, and I know somebody
else in my portfolio who is looking for
widgets, then I’m going to do a referral.

One of the things that is very important in
the relationship banking model is what I
call the ‘Triangle of Influence.’ The top part
of the triangle represents other businesses
that can either use your company’s business or other businesses that are like your
business that you can learn from. The second leg of the triangle is the legal community: What attorneys work in this space?
We can refer people to attorneys while
some attorneys refer entrepreneurs looking for access to capital to us. The third leg
represents the accounting end of the business. So much of an entrepreneur’s success
is built on whether or not he or she is adequately monitoring the accounting for the
work he or she is doing. A local or community bank will use the Triangle of Influence
to help an entrepreneur.

THOMAS FITZGIBBON is executive vice president for MB Financial Bank in Chicago. Reach him at [email protected] or
(847) 653-1996.