As the executive vice president and managing director SBA at Mission Valley Bank, I have had the privilege of witnessing firsthand the transformative power of SBA loans in fueling entrepreneurial dreams and driving economic growth specifically in Los Angeles and across the country. However, as we stand on the cusp of a new era, it is crucial for business owners to understand the advantages that SBA loans offer, which can significantly help their business grow.
For example, did you know that you can potentially get 100% financing on a building purchase? Owning your own building, instead of renting, enables you to make an investment in commercial real estate, so instead of paying ever increasing rent, you fix your monthly payment and grow your retirement as the building appreciates. SBA loans can also be used to restructure debt, provide working capital, buy equipment and inventory, all with much longer terms than conventional bank financing.
The past few years have been marked by unprecedented challenges. The pandemic exposed vulnerabilities of many small businesses, highlighting the importance of financial resilience and strategic planning. It is imperative that businesses in Los Angeles seek out resources to fortify their operations and withstand future constraints. During these turbulent times, SBA loans served as a lifeline for countless small businesses, providing vital capital and support to weather the storm. By leveraging SBA loans, businesses can access the capital needed to invest in innovation, expansion, and sustainability.
Factors for small businesses to consider
So, what do businesses need to do today to prepare for the year ahead? Here are some key insights and actionable steps to consider:
• Embrace Digital Transformation: The digital component is reshaping the landscape of small business lending, and those who embrace technology will be best positioned for success. From online application processes to document management, leveraging the right tools can streamline the SBA loan process, making it faster, more efficient, and accessible to a wider range of businesses.
• Stay Informed: As a business owner you have a lot to keep track of, but in an ever-changing regulatory environment, staying informed is essential. We are a resource, just a phone call away to keep abreast of policy changes, program updates and industry trends that may impact SBA lending. Engage with industry experts, attend webinars and participate in networking events to stay ahead of the curve and make informed decisions for your business.
• Build Strong Relationships: The foundation of SBA lending lies in strong relationships between borrowers and lenders. Cultivate open communication and transparency with your lender and seek out partners who are committed to your long-term partnership. A trusted advisor can provide invaluable guidance and support throughout the loan process and beyond.
• Focus on Financial Health: Lenders evaluate a variety of factors when assessing loan applications, including credit history, cash flow and debt-to-equity ratio. Take steps to strengthen your financial position, such as improving your credit score, reducing debt and maintaining accurate financial records. A solid financial foundation will enhance your credibility as a borrower and increase your chances of securing SBA financing.
• Invest in Growth: SBA loans are about fueling growth and expansion. Whether you are looking to launch a new product, expand your operations, or enter new markets, SBA financing can provide you the capital needed to achieve your business goals. Develop a strategic growth plan and leverage SBA loans as a catalyst for success.
• Prepare for the Unexpected: The future is inherently uncertain, and businesses must be prepared to adapt to changing circumstances. Establish contingency plans, build cash reserves and maintain flexibility in your operations to weather unexpected challenges and seize emerging opportunities.
Shifting businesses
Throughout Los Angeles, many business owners demonstrate remarkable resilience and ingenuity in navigating a crisis. These success stories serve as an example of how planning, adaptability and a proactive approach to leveraging resources like SBA loans can lead to financial stability.
One example is that of a local restaurant owner in L.A. who swiftly pivoted their business model to focus on takeout and delivery service when indoor dining was restricted. By embracing digital solutions, streamlining operations, and utilizing an SBA loan to invest in marketing and infrastructure, the business not only survived, but it also expanded its customer base and revenue streams.
Similarly, a boutique retail store in L.A. adapted to the shift in consumer behavior by enhancing its online presence, launching an e-commerce platform and using its SBA loan to invest in inventory and marketing. This approach gave the business the ability to maintain its customer base; it also attracted new clientele from across the country.
SBA loans hold immense promise for small businesses seeking to thrive in an ever-changing landscape. By embracing digital transformation, staying informed, building strong relationships, focusing on financial health, investing in growth, and preparing for the unexpected, businesses can position themselves for the year ahead and beyond.
Mission Valley Bank remains committed to remaining one of the top SBA lenders in California by supporting small businesses with innovative SBA lending solutions and personalized service. Together, we can overcome challenges, seize opportunities, and build a sustainable future for small business owners and communities across the southland.
Brian Carlson has more than three decades of expertise in SBA finance and leads Mission Valley Bank’s SBA division as managing director and executive vice president. He is also on the UCLA ACHDC Advisory Board.
