1. What advice can you offer business owners when banks refuse their loan applications?
2. Assume the role of consultant to Joe Jackson, owner of Jackson Pianos. What advice can you offer him about getting the financing he needs to support his company’s expansion?

Although banks tend to be lenders of first resort for small businesses, accounting for the greatest volume of loans to small businesses, they are not the only lending game in town, as the following profiles illustrate.
Heart to Heart Gifts
Yi Ping Lai’s business, Heart to Heart Gifts, an online store based in San Diego, California, sells toys, costumes, party decorations, and accessories priced from $6 to $100 for girls up to age 6. Recently, the company’s sales passed the $1 million mark. Even though a recession caused sales to decline by nearly 50 percent, Yi says that the company remained profitable. Yet her bank cancelled Heart to Heart’s $55,000 line of credit, saying that Yi and her company had become high credit risks. After many meetings with her bankers, Yi was able to get the line of credit reestablished, but only for $20,000. Yi is developing a new product line that will increase her company’s sales, but without adequate financing her efforts are hampered. “I need that cash flow for my business,” she says. Finally, Yi turned to a nonprofit community development corporation in San Diego, where a loan officer helped her obtain a $35,000 line of credit.