Greg Smith is a man who wears many hats: family man, business man, state representative and – more recently – the contract loan office for Umatilla Electric Cooperative’s Revolving Loan Fund.
Smith talked about the program at Tuesday’s Hermiston Chamber of Commerce Business to Business Luncheon.
UEC created the Revolving Loan Fund in partnership with Good Shepherd Medical Center to enhance and develop businesses throughout its service region. The minimum available loan is $5,000 and the maximum is $360,000. Smith said the current interest rate stands at 3.14 percent.
“That’s pretty awesome,” he said. “This is a neat tool for small businesses.” The funds come the U.S. Department of Agriculture. Projects eligible for the UEC loan program include working capital, new equipment, real estate transactions.
Smith shared the “six C’s” that lenders look at when deciding whether to approve a loan.
“The first is character,” Smith said. “Who are you? Do you participate in the community?”
The second is, of course, the borrower’s credit. “Do you pay your bills on time? Are you able to manage your credit effectively?”
The third C is collateral. “Is there a secondary source of payment if things don’t work out?”
Lenders also look at cash flow. “Does a business have enough cash to pay the bills coming in, plus take on new debt?”
Fifth, the borrower’s contribution. “What can you bring to the business? Do you have the skills needed to manage a business?”
Finally, community. “Does the business fit within the community? Does it add something to the community?”
The loan process begins with the borrower meeting with Smith and going over the six C’s. Smith said borrowers need to have two years’ of tax returns handy, a cash projection and a good idea of what he or she will accomplish if the loan is approved.
“Where is the business today and where can it be tomorrow with the loan?” said Smith.
Of course, not everyone who applies will get approved, said Smith.
“Sometimes I have to be the bad guy and tell the borrower, ‘I just don’t see it,’” said Smith. “That’s not always the funnest part of the job. I have a fiduciary obligation to make sure the money will be returned so there is money available for the next loan.”
But, said Smith, sometimes it’s in the best interest of the borrower for the loan not to be approved.
“It can actually be rewarding because I know I’ve helped keep someone out of trouble,” he said.
For more information on the Revolving Loan Fund, visit the UEC website.
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