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If you’ve tried to obtain a loan from the bank for your business lately, you comprehend it’s no slam-dunk. The promos for SBA loans and loans for minority or women owned businesses sounds wonderful, but when you get nose-to-nose with a banker it’s another story.

Some of the reasons that make it seem so difficult are that lots of lending officers feel that they’re lending you their money instead of the bank’s. They take about individual responsibility for maximizing repayment.

An additional is that they are mainly suspect of new ventures. Since 4 out of 5 or 80% fail in the first three years, a lot of lenders require a three-year history of doing business.

Finally, with all the bank merging and acquisitions that have taken place the decision-making process has been moved far off-site from the local branch. Add all of these reasons up, and you had better be ready to razzle-dazzle the banker.

Here are some information to make lending you more attractive to the bank. First, begin with a two-part presentation. Firstly submit a brief overview of your loan request. In this overview include:

• Excerpts from your business plan about your business concept, management team, and financial projections.
• Credit history overviews of the principals of your business.
• Short answers to key lender questions of how much you’ll need, how you’ll use it, and how will you pay it back?

This should be a two to three page document and can be considered a mutual qualifier. It determines if the bank has any interest in lending you funds before you spin your wheels for hours in front of the loan officer. You may want to end the document with your telephone number so that the banker can phone you back for the appointment or conversation.

If you’ve dazzled the loan officer adequately and have obtained the appointment to meet with him, then it’s time to get ready the “big guns”. The ammo you’ll come prepared with will be three years of individual tax returns for all the principals of your business and the existing business. Include credit reports on all principals, a complete and impressive business plan, and collateral and capitalization information.
This sounds like a lot of information and will need huge effort, but that’s why business ownership isn’t for everyone.

As well to being ready with all that paperwork be prepared for any off-the-wall questions the lender might throw at you. Take time to think about and originate a 30-second commercial about what you plan on doing and how it will benefit them and the business.

Be ready to make clear any credit blemishes that show up on the credit reports before the banker has an opportunity to worry about them. Be sure you’re able to show “cash-flow” understanding and awareness, without which any business is doomed. Plot your most practical expected cash flow and bank account balance. Ensure the bank balance never goes negative, and for a good touch show the loan repayment as a separate line item. This shows the banker that you comprehend priorities.

Collateral may be needed to satisfy the lender’s angst regarding repayment of the loan, and sorry to say most of small businesses have too few assets to satisfy this need. Lots of entrepreneurs are forced to pledge individual assets for instance their home to allay the bank. This may seem frightening, and it is, but for you’re really sure of your success.

It sounds like a scary task, but with some research and willpower it can be done. It’s not as effortless as all the ads you’ve heard, and just the fact that you are starting a “woman-owned” business won’t cut any ice with a banker, but all of life is a risk isn’t it?

After all, that’s why you’re an entrepreneur instead of a corporate lackey isn’t it? GO FOR THE GOLD!

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