7 Steps to a Successful Loan

Seeking a loan can be a complicated and stressful experience, but it doesn’t have to be. Sure, lending standards have tightened in recent years, but banks want to loan money. It’s what they do. Whether it’s a startup loan, equipment loan, a loan to finance an expansion of your company or you’re just in need of additional cash flow, there are several key steps to ensure a successful transaction that will allow you quickly return to the business of running your business. The basics are pretty much the same for short- and long-term loans.

  • Find a Banker You Trust – Preferably one who understands your industry and target market. Or, find one who is interested in knowing more about your business not only for this transaction but because he or she hopes to build a long-term relationship with you that will guide your success.
  • Prepare a Solid Plan – If you’re looking for a startup loan, come to the table with a solid business plan that makes the case for why customers will buy your products or services; you should be able to show realistic short-, medium- and long-term projections. You’ll need to present hard numbers for cash flow projections, including earnings and expenses, for at least the first few years you’ll be operating. (Tip: your banker will be encouraged by your knowledge of seasonal highs and lows that might affect your business model.)
  • Get Your Numbers In Order – If you’re an established business, your banker will need to analyze at least two years (three years is preferable) of your financials. It’s important to know that your accounts receivable aging summary must match your balance sheet.
  • Know Your Value – Bring your credit history and ratings, along with the value of any assets you are prepared to put up as collateral. Collateral can include anything from equipment you’ve purchased for the business to real estate and even accounts receivable if you’re already in business.
  • Prove Your Edge – Be able to discuss and show your competitive edge. What is it about your business plan that makes you competitive or smarter than others in the marketplace? Discuss the breadth of research and analysis you’ve done.
  • Have Back-Up Plan – Be prepared to tell your banker what your alternative financing plans are if you aren’t approved. That means you’ll have to do some research on the possibility of using retirement funds or seeking outside investors, for example. The fact that you’ve done this will make a good impression and might just lead both of you to the best solution for your financial needs.
  • Give Your Best Pitch – Stay positive throughout the process. Come to the loan interview dressed professionally and remain confident in the facts that support your application. Remember, you have to sell yourself, your business plan and your trustworthiness with money.

Remember, the lender’s job is to make sound decisions as defined by the financial institution and by government regulations.  Just like your business will be unique from your competition, banks are unique in how they make loans. So, if you don’t get approved on the first try, be sure to ask the banker how you can improve your outcome in the future.



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