Securing a Small Business Loan RevisitedPosted on October 22nd, 2018
Outsourced Accounting Department, Inc.
From time to time I receive emergency requests from clients who need to provide financial information to a bank, but they are months behind getting us the information we need to complete their financial statements. In recent articles I’ve also talked about the importance of using an appropriate method of accounting, budgeting, and strategic financial planning. The reasons these activities are important are twofold: 1) managing your business’ growth, profitability, and cash flow; and 2) obtaining outside financing as and when needed. This article revisits some earlier articles I’ve written on the topic of obtaining bank financing, but the two objectives are very closely intertwined, as banks first and foremost want to know if you are addressing reason number 1:
Step 1: Establishing a Banking Relationship
At some point, most small businesses owners will visit a bank or other lending institution to borrow money. Understanding what your bank wants, and how to properly approach them, can mean the difference between getting your money for expansion and having to scrape through finding cash from other sources. Unfortunately, many business owners fall victim to several common, but potentially destructive myths regarding financing, such as:
- Lenders are eager to provide money to small businesses.
- Banks are willing sources of financing for start-up businesses.
- When it comes to seeking money, the company speaks for itself.
- A bank, is a bank, is a bank, and all banks are the same.
- Banks, especially large ones, do not need and really do not want the business of a small firm. Read More
Step 2: Positioning
Walking into a bank and talking to a loan officer will always be something of a stressful situation. Preparation for and thorough understanding of their evaluation process is essential to minimize the stressful variables and optimize your potential to qualify for the funding you seek. Read More
Step 3: The Application
Lending is the essence of the banking business and making mutually beneficial loans is as important to the success of the bank as it is to the small business. This means that understanding what information a loan officer seeks–and providing the evidence required to ease normal banking concerns–is the most effective approach to getting what is needed by the lender. Read More