The most common source of working capital for small businesses is internal cash flow of the company and/or personal assets of the principal. Every small business, however, gets to the point where it wants to expand or hits a rough spot and needs some outside assistance. When it is that time for you, consider the myriad of working capital resources available on Long Island. Working capital loans can help you increase that advertising, buy those computer upgrades, add to inventory, pay the bills during slow months.

The first step in obtaining financing is to determine how much you need and for what uses. The worst thing you can say to a lender who inquires "how much do you need" is "how much will you lend me?" Examine your plans. Work with your accountant to list specifics.

One you have determined why you need money and how much you need, put together the materials you will need for any lender: three years financial statements or tax returns on your company; current financial statement on the company; personal financial statement listing assets, liabilities and sources of income on the company's major owners, written history of the business including why you need money and how you plan to use it. Make sure your credit, accounts receivable and payable are in order before approaching a lender.

The first lender you should approach is your local banker - the one from whom you previously borrowed money (and successfully paid it back) or the bank where you have your business accounts. If you have not established a relationship with a local commercial banker, run - do not walk - to your nearest commercial bank and open an account, introduce your self to the branch manager and stay in touch to keep him/her informed about your company and its progress. When its time to borrow money, you want to deal with someone who knows your company and trusts your business acumen.

Even with the best laid plans, there may be times your banker can't provide the funding you need on terms you can afford. Perhaps you're over the bank's lending limit. Or maybe your company is considered a start up and the bank doesn't lend to start ups. Or maybe the bank doesn't have a suitable loan product to fit your needs. In those cases, the SBA 7A loan program may be just the ticket for you. The SBA 7A (US Small Business Administration) loan program provides money for working capital from a bank or nonbank lender with a partial guarantee from the SBA. That guarantee often induces a lender to make you a loan it otherwise would not make to you. The loans are generally long term and reasonably priced. Within SBA 7A, there are special programs such as community express, low doc, etc. which can expedite your request or cause decisions to be based strictly on your personal credit rather than the business financials.

And, for small amounts (under $35,000) you may want to access the SBA microloan program. For information about the SBA programs you can contact SBA at 631 454 0750 or log onto the national web site at sba.gov. Almost every bank on Long Island is an SBA 7A lender. So, don't give up if the bank says no-ask your banker to consider making the loan under the SBA guarantee. In addition to the SBA programs and conventional bank loan products, there are many niche or special loan programs available on Long Island to assist targeted populations of businesses and specific geographic areas. For information about these and other financial tools, tune in next month. If you can't wait, call Long Island Development Corporation (516 433 5000; biz-loans@lidc.org) for help.