Getting a Business Loan

Chalana Williams, First Federal of Lakewood

Getting a Business Loan

Need money to expand with new equipment or into new locations? To pay suppliers, and market your products or services? If so, it might be time for a business loan. Getting the working capital you need with a loan you want at an affordable rate comes down to preparation.

The most common reasons for applying for a business loan include:

• Buying real estate
• Expanding your business
• Buying equipment
• Investing in inventory
• Getting needed working capital during a money crunch
• Launching a new product

What You’ll Need

Bank loans typically require extensive paperwork. Check with your accountant to make sure all your business financial reports are ready for the loan officer’s review.

At the least, you will likely need:

• Both personal and business financial statements.
• Business plan, including biographies of the principals, current state of the industry, growth rate, historical information on the business, etc.
• Projections for cash flow for the coming year(s)
• Guarantees from the principals
• Industry risk as rated by governmental SIC codes

When you meet, discuss the story of your business to tie it all together and the reasons you are seeking the loan. If you have questions, ask the loan officer.

What Lenders Want

Your firm should be on solid financial ground. Best case scenario, that means your business has been profitable for the last three years.

There are three primary criteria to meet:

1. The purpose of the loan must be financially sound, not for speculating or investments that are passive in nature.
2. Have a proven track record with a solid balance sheet and good revenue/income trends. The principles, including you and the key members of your management team, must have good credit, personal or business, and be experienced in the field.
3. Proof you can pay the loan back.

Do your research, prepare well in advance, and completely fill out all the paperwork. If you prepare adequately, you have an increased likelihood of getting what you need.