Banks are a necessary evil. They are in business to make money by lending money to business and individuals. They are also in charge of protecting the bank from losses due to the loans that they make. Sometimes these two activities are in conflict with one another and when they are the banker will always protect the bank. The small business needs to remember this because his existence depends on remembering it. Banks are also regulated and sometimes the regulators can be more terrifying to the banker than the banker is to the borrower.
This said, all small and large business need to go to banks for their short and long term financing needs. The small business cannot go to the Market and issue stock to be listed on the exchanges like the Microsofts and General Electric’s of the world. The small business must remember that no matter how well he or she is treated they are an asset and thus can be valued or discarded at will by the bank or financial institution.
The bank will initially want to see the financial parts of any business plan first. This means that you need to have your Personal Financial Statement up to date and properly filled out with a signature and date. Have a History of the Company – Description of the business and need for the loan, along with a Source and Use of Proceeds for the money needed. The bank will need to see Financials and/or Projected Financials of the business with a future Cash Flow Statement showing you can pay for the loan over time.
Next the Bank will go over these Financials and proceed to run your personal credit. Only after he does this will he or she actually look at any Marketing or Product materials that you have worked so hard on. The old saying is partially true: If you have money the bank will lend you money, If you do not have money the bank will be reluctant to lend to your business. The key here is to give the banker what he or she wants on the first visit so they will not loose interest in you or your project. Go over the previously mentioned documents before the bank sees them to work out and problems or to think of any answers to questions that will come up because of the financial information or the credit report.
I guarantee you that you will have the Loan Battle half won if you adhere to the above recommendations and have you information inspected by someone who will be able to improve it or to find flaws in the information before you get before the banker. remember the banker is your friend but he is friendlier to his board of directors, his regulators and his projected profits to the bank.
You can get help with any business loan application or question on any loan situation by Emailing roger@schlueterfinancial.com or going to my website at www.schlueterfinancial.com