Preparation Key to Getting Small Business Loan
(continued)

Show up fully prepared to discuss your credit history and your ability to handle the additional debt. You will be asked to provide two-to-three years worth of business and personal tax returns and a personal financial statement, among other information.

Here are some other key areas the bank may examine in a business loan request.  Do your homework on these, and you can make the banker feel much more comfortable about helping you grow your company.

• Develop a written, realistic business plan.
• Show you have a personal investment and a financial stake in the business.
• You may be an expert in your field, but be prepared to show that you have the management skills necessary to succeed in business.
• Show that you have a record of maintaining adequate retained earnings. 
• Prepare a contingency plan in case things go bad.
• Develop a plan that can protect you if a key person is no longer with the business or is unable to work.

In short, make the banker feel comfortable that you are running a good company that can make money and will be able to meet its obligations even if it runs into a few obstacles.

Keep in mind that while banks do have different appetites for risk, they are in the business of making loans.  If you run into a roadblock with one, keep trying.

Other options to provide working capital may be available. Factoring your commercial accounts receivable, for example, can improve cash flow, lower your business office expenses related to collection and credit screening and actually enhance your ability to qualify for traditional bank financing.

Your banker can help you examine what’s right for your company. Make sure you look for a bank that takes the time to understand your business and your unique credit needs.

Going to the bank for a loan doesn't have to be hassle. The secret is doing your homework and being prepared, and you can reach your financial goals.

William Braddy is Mecklenburg area executive for First Citizens Bank.

<<< Prev. page | 1 | 2 |