Local alternative business lenders address the 5 C’s of credit

Representatives from local alternative business lending agencies spoke to attendees Feb. 21 about the factors considered when administering loans, kicking off a three-part series tailored to entrepreneurs and those considering starting a small business.

Called “Filling the Finance Gap: Business Lending Options,” the first event, held at the Beverly Gray Business Center in Buffalo, addressed the five C’s of credit and allowed an opportunity for those in attendance to ask questions and meet the lenders.

Jonathon Ling, Business Development Officer for Pathstone Enterprise Center, presented five key variables considered in a loan application: capacity, collateral, character, conditions, and capital.

“Banks talk about the five C’s of credit,” Ling said. “But they don’t talk to you about the five C’s of credit.”

Ling described the importance of a good credit score, a cohesive business plan – especially for startups – and stressed that the character of an individual can also be a strong consideration. Each lender will weigh these five variables differently, he added.

The event was sponsored by Excelsior Growth Fund, Erie County IDA, Westminster Economic Development Initiative, Inc., and Pathstone Enterprise Center. Each alternative lending agency was represented at the meeting, and their lending options and products were presented to the audience.

Agency representatives agreed that they’re not in competition with one another, and each offers a different service targeting a different base of entrepreneurs in Buffalo and Western New York.

WEDI, for example, is a microlender offering loans of up to $20,000 as well as technical assistance in loan applications. The Erie County IDA offers larger loans and requires collateral, and does not offer the same technical assistance.

As an alternative lender, each agency is trying to fill a gap where banks can’t, said Sherri Falk of the Excelsior Growth Fund. The nonprofit can approve a loan within two days.

Falk cautioned audience members against considering small business loans available online, which frequently have predatory interest rates from which it’s difficult to escape.

But in some instances, EGF can offer refinancing, she added.

Audience members had a range of different backgrounds and interests. One man owned a taxi cab company. Another woman wanted to offer higher education and health care training courses online. A woman who owned a Buffalo East Side thrift shop was also in attendance. All listened to the different lending options available to business owners in Western New York and had time to meet with the lenders afterward.

Alternative lenders will be available again during the second meeting in the three-part series Saturday, March 24. “The Importance of Cash Flow” will be discussed from 10:30 to 11:30 a.m. at the Community Action Organization building at 1423 Fillmore Ave. in Buffalo.

The event is open to the public and free to attend. Light refreshments and snacks will be served. For more information or to register visit http://www.wedibuffalo.org/lendingoptions.

Read more articles by Joel Lehman.

After spending 15 years in northern Vermont where he worked as managing editor for a daily publication, Western New York native Joel Lehman returned to Buffalo this summer to be part of the city’s renaissance. He lives with his girlfriend and his goldendoodle, Wilson, and he enjoys running, skiing and cooking for his family.
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