So you need a loan, now what?
Whether you're funding a capital project, consolidating debt, managing cashflow, buying real estate, or maybe buying-out a partner, the old adage rings true: If you fail to plan, you plan to fail.
There's no way around it—access to credit when you need it is critical to businesses large and small. That's why we recommend clients get organized and know what to expect, long before the time comes for you to start talking to your bank.
Here are the 3 things you need to know:
Be Organized: Banks are in the business of lending money, which means they don't cut corners when putting you under the microscope. This can feel like an eternity if you need a decision quick. In advance, be prepared and organized.Loan officers typically have a good deal of discretion over how your application is handled. Showing up organized and polished is a smart way to make sure your loan is processed as quickly as possible. Of course, some people are surprised by the scope of what the bank wants to see. Here is a general checklist to download which you can use to compile all the necessary documents ahead of time to expedite the process.
Loan rates and terms: The loans given by the banks are determined by the perceived risk of the business's ability to make regular loan payments. Factors such as net worth, company's history and company's cash flow are important. The banks will review the financial statements in depth to determine how much risk is involved. The higher the risk, the higher the rate, or possibility of getting denied the loan all together. Consideration should be given how the loan is structured (open vs closed, 3 years vs 5 years, etc.). Planning ahead of time can increase your business chances of obtaining favorable financing terms. Cash flow is king in every business, therefore be mindful of how the loan is structured and the rates given.
Know Your Bank: Build your relationship with the bank. Every business owner should get to know their branch's business account manager. A personal relationship always proves to be effective when the company needs done something quick and efficient. The manager can also put in a good word for the business owner from prior positive experience. Try to maintain your personal and business financial affairs at the same branch. This creates familiarity, community and trust. All which are very important for a successful business.
Talk to us about your unique financing needs. Let's get the conversation started.