Entrepreneur | Eileen P. Gunn
Tell your survival story. That's the advice to entrepreneurs seeking loans from the head of a leader in small-business lending.
"I like to say that if there were four dry cleaners in your town, and now there are two, those are the two that never ruined people's shirts," says Chris Reilly, president of CIT Small Business Lending, a Small Business Administration-approved lender based in Livingston, N.J. "There's a natural selection process that's happened over the past two years. The survivors are the companies that had a better business and better owners."
CIT, an arm of commercial finance company CIT Group Inc. and once the No. 1 small-business lender by volume, is itself a survivor. CIT Group sought and emerged from Chapter 11 bankruptcy protection in 2009. Known for its asset-based lending, loans to franchisees and factoring services for manufacturers, it still provides those services, but at a much lower volume.
CIT wrote $82.5 million in SBA 7(a) loans in 2010, down from $771 million in 2008, according to the Coleman Report, a newsletter for SBA lenders. But in the first quarter of its 2011 fiscal year, which ended Dec. 31, CIT's small-business arm had already approved more than $53 million in loans, according to the SBA.
While the climate for small-business lending isn't what it was pre-recession, it's better than it was a year ago, according to Reilly. Borrowers should be ready to talk with lenders about how they made the changes they did to help offset revenue losses and keep their doors open through the recession, she says.
Reilly spoke to Entrepreneur.com about the improving economic environment and how to get your loan application approved in 2011. Here are excerpts from that conversation.
Entrepreneur: How is the lending climate for small business changing?