TALKING MONEY<br> Chamber 'Money Breakfast' draws 100 to first-ever session in Big Lake
By Naomi Lindberg
Future and established business owners gathered last Wednesday at a “Money Breakfast” to get their financing questions answered and were not disappointed.
In attendance were small (and some large) business owners from the Sherburne County area, bankers, construction companies, representatives from the small business administration, MN business finance corporation, the initiative fund, MN Dept. of Trade and Economic Development and local economic development officials.
Although not everyone had their questions answered, they at least were connected with the right people to move the progress of their business along, like Don and Brad Braum from Clear Lake.
The father and son team is interested in building a mini-storage building in Clear Lake Township, but were uncertain where to begin.
Although the answers to their funding questions were not answered as they wished, (many loans do not cover mini-storage) they did find different avenues to explore in pursuing financing for their business venture.
Don plans on meeting with Minnesota Small Business Development Center (SBDC) Regional Director Dawn Jensen-Regnier to discuss their business plan and get their project off the ground in the near future.
Regnier counsels business owners in different funding opportunities and helps them in preparing loan applications.
In addition to these services, Regnier will also help develop a business plan, analyze cash flow projections, look at income status and balance sheets, help with resumes and go through personal financial statements of the potential business owner. All of these things are needed in preparing a loan application package.
Regnier’s services are provided at no cost to the small business owner and are funded through federal and state tax programs. Other fund providers for the program include the Small Business Administration (SBA) and St. Cloud State University (SCSU).
Although Regnier works out of the SCSU office, there are other sites where these services are provided. Local sites include the Elk River Government Center and the Buffalo Public Library. Steve Duncan, CPA, is available two days a month in the Elk River office to counsel area business people.
The SBDC also provides training seminars dealing with current business issues that are important for success.
Mary Loegering, owner of Mary’s Home at Last, will be keeping Regnier’s name in mind for help in any future business ventures, as Regnier can help her find out where she stands and point her in the right direction as far as the next step in achieving her business goals.
Regnier’s presentation gave many of the business owners in the audience some hope in moving their business forward. One of those was Carolyn Bryant of Zimmerman.
Bryant went to the event hoping to find some direction in what direction she should go next in getting her business off the ground. After attending the seminar, Bryant will be looking at a location for her recreational business and then hopes to meet with Regnier in the near future to take her plan further.
The seminar also gave many established business owners like Mary McKie, owner of County Country Services, Inc. of Big Lake, a better idea of what kind of financing is available to business owners wanting to expand.
Some loans available for small business owners include a SBA 7(a) guaranteed loan, which guarantees up to 90% of a loan for the purpose of working capital or fixed asset financing for qualified businesses. This loan can also be used to refinance existing debt.
The SBA 7(a) loan will finance up to $750,000 with fixed or variable interest rates. Rates are not to exceed 2.75% over the New York Prime Rate.
Another loan program available for small business owners is the SBA 504 loan program, which provides secondary subordinate mortgage financing.
The SBA 504 will finance up to $1,000,000, which is to be used in addition to bank financing. This loan is offered in a 10 or 20 year term and has a fixed rate of approximately eight percent.
Greg Hohlen, assistant vice-president commercial lender for First National Bank in Elk River, informed those in attendance of information that lenders look for when receiving a loan application.
The number one item a loan package must include is a business plan, said Hohlen. The business plan should be narrative and offer a description of the profit center, which is to show knowledge of what the business is going to do. It should also include the anticipated market for the product, a pricing strategy, the location and a run down of competition in the area.
Also needed in the loan package are financial statements from the last three years, if it is an existing business. Profit and loss must be shown in the statements and a balance sheet must be provided.
A summary of project costs should also be included along with cash flow projects.
Copies of all legal documents should be included. These documents include purchase agreements, leases, governing documents and text identification numbers.
Also important in a loan package are personal financial statements from the applicant. This allows the financial institution to gain insight into how the applicant handles his personal affairs. This is probably how the business will be handled, said Hohlen.
A brief resume of management, owners and officers in the business are needed and personal income tax returns of the owners from the last two years are needed in the loan package.
In applying for a loan, an applicant must demonstrate the ability to manage a business or hire someone who is able to do so. They must also show a knowledge of the product or service they are supplying.
They must be able to demonstrate the ability to market the product or service, know how to reach the market place and prove a demand for the product in the area.
Applicants must also prove cash flow from the business and determine available cash flow.
If none of these things can be proved, the financing institution will ask that collateral be used in financing the business, said Hohlen.
McKie, Loegering, Bryant and the Braums all agreed the seminar most importantly provided them with contacts who can help them in getting the answers they all are looking for.
Total number of those attending the seminar was 105, according to Big Lake Chamber of Commerce President Anita Peske. Of those, 30 were from Big Lake, 32 from Elk River, two from Zimmerman, 24 from Princeton and seven from Becker.
Sherburne County Budget and Economic Development Coordinator Alex Wikstrom called the meeting a success during the Sherburne County Commissioners meeting Tuesday.
Wikstrom said the event was well received and worthwhile to all who attended. He said the event was a great collaborative effort between the chambers and the county and numbers of those attending were higher than were expected.
The seminar was co-sponsored by area chambers of commerce and the Sherburne County Economic Development Alliance (SCEDA).
For more information concerning financing options and loan counseling for small businesses in Sherburne County log onto www.co.sherburne.mn.us or call the Sherburne County Economic Development Coordinator at 1-800-433-5229.
To make an appointment with Steve Duncan at the Government Center, call (763) 241-2701.
For SBA Small Business Education information log onto www.score.org on the internet. The information is provided by Service Corps of Retired Executives (SCORE).