Credit history is usually the most important factor in being evaluated for a small business loan, said a small business adviser at the Greenwood-Leflore County Chamber of Commerce Tuesday.
"The biggest problem we have getting people approved is credit history," said Chuck Herring, small business developer for South Delta Planning and Development District Inc.
He told attendants that the only truly free Web site offering a free credit report was www.annualcreditreport.com.
Herring offers free consultation services to people seeking to start businesses. His organization is funded by the U.S. Workforce Investment Act of 1998.
He advises entrepreneurs on requirements for federal Small Business Administration (SBA) loans, traditional bank loans and loan from other lending institutions.
Although he sees about 200 people a year, only 25 to 40 of them obtain loans, Herring said. About half the loans granted are SBA loans. They are easy to get, he said.
Successful business owner and loan recipient Bertron Cowan attended the meeting.
"Chuck helped us with our business plan and also with the loan application process," Cowan said.
His business, Cowan Music, which provides band equipment repair, piano tuning and music lessons, has been in operation since 1984.
"Everything's going well," he said.
Cowan went with an SBA loan because the paperwork wasn't as long and it was much easier to get than a regular bank loan, he said.
The federal government makes SBA loans easy on banks because banks are guaranteed to be refunded for 85 percent on the first $150,000 of a loan and 75 percent for $150,000 up to $1 million on a loan if the recipient's business fails.
"I always make the analogy to clients when they come in - if their relatives wanted you to loan them some money, you'd probably loan them a little more if the government were going to give you an 85 percent guarantee," he said.
The most common request Herring receives from females is for day care agencies. Men most often want to buy their own 18-wheeler trucks for agricultural grain hauling in the Delta, he said.
Herring's lecture was part of the Chamber University series. Contact the Chamber of Commerce at 453-4152 for information on upcoming seminars.
Those interested in learning more about obtaining a loan for a startup business may contact South Delta at (662) 335-6889.
