QUESTION: I am a part owner of a business that deals with party promotions. My business name is registered with the Companies Office of Jamaica. Our problem is that we currently don't have the capital needed to host the type of parties we want, and we cannot attract a sponsor because this is our first major project.

Sponsors are reluctant to invest with us.

Is it possible for you to advise me on how we could obtain a loan or any financial assistance to help offset cost, and to boost the capital within our business?

- Bennett

This week, SmallBiz: problem Centre turns to Waldon Wright, business line and special-projects officer at Churches Credit Union in Kingston for guidance.

To acquire financing requires the borrower to have some cash in hand, was Wright's immediate response.

Bennett will need to secure about one-fifth of the loan amount he is seeking.

Wright suggests that he amass those funds before approaching a lending agency.

"Most projects as well are undercapitalised. One should have at least 20 per cent of project costs in hand. When they have no money, they leave themselves no room to absorb shocks, such as those experienced through recent tax increases."

extra cash

Raw-material prices and the cost of equipment and machinery may also shift, which the extra cash in hand can be used to cover.

Bennett should consider using his own resources to stage that first party, said Wright, to establish a track record as a party promoter, setting the stage to pitch his business to a loan manager.

"Having done so, make sure that the accounts - noting income and expenditure - are recorded as proof of business activity," said Wright.

"These records will add to your profile of viability when you go for a loan."

Bennett might also try raising the funds by holding smaller events, which provide cash and add to his reputation as an entertainment manager.

Wright also points out that having no cash in hand implies that Bennett has so far not been good at saving, a habit which he will need to develop in order to create a sustainable livelihood and find money to reinvest in the business.

evidence of savings

Some evidence of savings, again, would factor in his favour when he approaches a financial institution for a loan.

Wright states that the failure to do proper financial planning, underlined by the absence of a review or survey to assess project viability, is a general problem encountered with small-business start-ups.

If Bennett has demonstrable experience at successful party promotion, some cash in hand, and if his business plan and market survey are in place, then he can approach any local financial institution with confidence, Wright said.

He should note that he might also need to come up with collateral in the form of land, house or car title in order to get a loan to stage the kind of party he appears to have in mind.

The Jamaica Business Develop-ment Corporation and other agencies offer guidance to start-ups on business plans, and access to financing.

The Young Entrepreneurs' Association, an affiliate of the Jamaica Employers' Federation, also offers advice to start-ups whose businesses are registered, on how to get their businesses up and running.

Email Waldon: waldon.wright@churchescreditunion.com.