Tips for small business finance shared by East Portland banker

Discover what people at the Foster Area Business Association learned – what it takes to get a loan or line of credit, these days ….

Wayne Matsumura, with Unitus Credit Union, tells the importance having good personal credit for a small business person asking for a loan.

Story by Watford Reed and David F. Ashton; D. F. Ashton photos
For small business owners, things could get a little worse before they get better, members of the Foster Area Business Association (FABA) were warned by a financial expert.

Wayne Matsumura, business services officer with Unitus Credit Union, told owners and managers of small businesses in Southeast Portland that worse times could lie just ahead, but he expects the economy to start getting better next year. He spoke at the FABA meeting on March 26 at Junior Achievement’s building on SE Foster Road.

“It will be a tough year,” he said. “Most businesses are trying to hang on.” At the same time, Matsumura told his listeners that almost all credit unions are in good shape financially, because “we didn’t get greedy” when times were good. And, they have more flexible lending policies, such as not charging penalties for early payment of loans.

But, the downturn in the economy and changeable conditions threaten many established companies. He said he knew of a firm that earned money at the rate of $500,000 in six months a short while ago – and, the last six months, has lost $250,000.

Nearly half of all small businesses use credit cards to help finance the operation of their operations at one time or another, Matsumura says.

He added that their research shows 44% of small businesses are typically financed on credit cards, 29% from bank loans, 19% from private loans and 5% from the federal Small and business Administration.

The most important factor in evaluating a business, he said, is the financial expertise it’s demonstrated during the past two years – and the expertise of the owner and manager are leading factors in that. Positive cash flow is of the utmost importance, he added.

Other decision-making factors include:

How well the borrower manages his or her personal finances;
Collateral available to secure the loan (unsecured loans are uncommon);
Economic conditions;
Capacity – the ability to weather a sudden downturn in business; and,
Having an established deposit relationship with the lending institution.

Turning to the topic of business credit reports, he said their institution looks at:

Company background information;
Legal Filings, collections, and trade information;
Monthly & quarterly payment trends;
Commercial finance, banking, leasing, and insurance bond relationships; and,
UCC Profile and inquiries.

That being said, Matsumura noted that Unitus’ loan portfolio is very heavily weighted toward personal banking and lending; his job is to stimulate new accounts within the business community.

Unitus is a $700 million institution, was started in 1937 and served customers until recently as Oregon Telephone Employees Credit Union.

FABA works to foster East Portland business growth

FABA’s president, Nancy Chapin, rides in this year’s 82nd Avenue of Roses Grand Parade, promoting their late-summer event.

The president of FABA, Nancy Chapin of The Support Group, told members present at the meeting of their organization’s new web site, about to come online.

“And, we’re getting geared up for our best ‘FUN ON FOSTER Festival & Art Walk’,” Chapin said. “It will be September 26.”

After the meeting, members and guests were guided through the “city within a building” at Junior Achievement that they call BizTown – where young students get to come and spend a day putting into practical use business skills they’ve learned in the classroom. It includes realistic office and business settings built around a “town square” – all in a giant room.

Phoebe Ebright, marketing manager and John Hancock, president of Junior Achievement-Columbia Empire welcome FABA members to their facility.

“Tell you readers to come see how Junior Achievement is helping students get practical experience that teaches them about business and economics,” said the organization’s president, John Hancock.”

You can learn more about Junior Achievement by visiting their website: CLICK HERE.