Book Review: Loan Financing Guide for Small Business Owners

Originally published by Independent Professional Book Reviewers December 26, 2006
http://bookreviewers.org/loan_financing_guide_for_small_business_owners.htm

Loan Financing Guide for Small Business Owners
D. Neil Berdiev
Small Business Empowerment Publishing
ISBN 0-9774117-0-2
177 pages
Soft cover
www.loanfinancingguide.com

So, you have finally decided to open that cozy café on the corner or you have been running a dry cleaning service for a year and feel you’re ready to purchase the empty building next door to expand into a coin laundry service. You have a business plan and financial statements at hand and feel assured that you can convince a lender that you deserve the loan that will take your business to the next level. Are you sure about that? If your answer is yes, that means you can respond to the following questions succinctly and openly without hesitation: How much money (the exact amount, not an estimate or range) do you need to borrow? What, specifically, will the money be used for? How quickly will your business be able to repay the loan? Are the answers flowing freely, complete with qualitative documentation in a clear language that any lender can quickly grasp and translate into loan approval? No? Help is available.

Author D. Neil Berdiev, a banker who has worked for Fidelity Investments, Fleet Bank and other financial institutions, has written a practical, straightforward book aimed at educating small business owners about the process of securing financing. Loan Financing Guide for Small Business Owners informs entrepreneurs about all aspects of financing from the types of loan products available, the variety of bank and financing companies to approach, as well as how to present the information that will effectively answer the questions a lender uses to determine if a business is worth the investment and risk required to approve a small business loan.

Berdiev suggests from the start that business owners take an honest, realistic look at their business’ structure including the amount of equity they hold in the company, cash flow history, management, and the risks in their industry. This is the starting point for preparation of a loan application. The Request for Loan Proposal (RLP) is one of the tools the author describes that is used to effectively present a small business in its best light. The RLP helps the business owner translate qualitative desires into quantitative goals. Lenders need to see how a company will handle timely repayment of a loan and Berdiev provides the information and instruments needed to enable the business owner to do just that.

Throughout the book, the author informs the reader about various aspects of lending that should be a part of an owner’s knowledge set. The primary financial statements that lenders need to see are described as well as what the author calls the “five C’s of credit” (character, capacity, capital, collateral, and conditions). Berdiev stresses the importance of being ethical and forthcoming in the presentation of a business’ strengths and weaknesses. He also makes a point of noting that any weaknesses disclosed should be accompanied by a concrete plan to deal with the outlined deficiencies. And it doesn’t end there. Business owners are warned that loan approval does not constitute the end of the financing relationship, because loan agreements include requirements that demand ongoing contact and disclosure between the two parties: “… the moment you sign a loan agreement, you have to play by the lender’s rules outlined in the contract (p.105).”

Loan Financing Guide for Small Business Owners is an essential tool for beginning or seasoned business owners who find themselves in the position of needing debt financing to grow their companies. The book is structured with short, to the point chapters and accompanying appendices that make it useful as a reference book once an initial page by page read through has been completed. To be successful in securing loan financing, every small business owner needs this book.