5 key tips to successfully applying for a business loan

1. Provide detailed information. Don’t skimp on specifics with banks. Show exactly how you will use the requested funds and how much you need to accomplish your goals. Lenders appreciate attention to detail and preparedness when it comes to the facts.  For example, if you are looking to purchase a new piece of equipment, provide quotes on the exact costs, how much capital you need to facilitate this purchase and specifically how the new equipment will help grow your business.

2. Be prepared to share your financial information—all of it. Provide your lender with all the financial background on your company, future growth plans and often your personal financial information. By offering this information up front, it will allow a bank to gain an understanding of your complete financial situation and it will ultimately reduce the time to finalize your loan package.  The more information you have to illustrate that you’ve run your business well in the past gives banks the confidence they need to invest in you for the future. The more information you provide, the easier it will be for your loan officer to get your loan approved. Banks are in business to loan money, so this is a win-win for both sides.

3. The more the merrier. Research and make a list of five potential lenders and start at your first choice. If approved for a loan, continue to shop the market for the best rate if you have time. If declined, keep trying!  Too often, mostly due to lack of time, business owners stop at the first or second negative response. Be prepared to seek a loan from a minimum of five lenders. And learn from your mistakes. If one lender turns you down for one reason or another, learn from this feedback and adjust your approach with the next lender.

4. What information will you need?

Different lenders may require more or fewer documents, but in general, you will need:

• Personal and business credit history
• Personal and business financial statements for existing and startup businesses and as well as a projected financial statements
• Strong, detailed business plan (including personal information such as bios, education, etc.)
• Cash flow projections for at least a year, and
• Personal guaranties from all principal owners of the business

5. Think local. There are all types of lending institutions, but community lenders are often best equipped to appreciate how your company works within the local business environment. Community lenders’ key insights can range from local market dynamics, to cash flow timing issues, and they frequently understand your ability to achieve success. It is always important when working with a local lender to highlight your involvement outside of work within the community. This is a great demonstration of your commitment to the community where you both live and work.