Before you go to the Bank!
Posted on July 16, 2008
OK…you’ve analyzed, compared and investigated and analyzed, compared and investigated some more and you have made the decision to move forward and purchase the business….Congratulations! Well, not many of us are in the financial position to purchase a business with cash or have a family member willing to invest in your new company.
Most of us need a business loan to assistance us with the purchase. Unfortunately, our current economy is not quite as vibrant as a year ago and the neighborhood banker may be acting a tad bit conservative when it comes to approving loans. However, regardless of the economy, the bankers still need to make loans; it remains a big part of their overall profitability.
Start your “loan request” with three telephone calls. This will save you time and perhaps some aggravation. Your three calls should be directed to three separate banks. Depending on your community, you should consider speaking with a large national bank, regional bank and a smaller community bank. Here is a list of questions that you can use as a guide to assist you in your conversation and finding the “right” bank.
First, make sure you are speaking with a knowledgeable lending officer, who understands the banks policy on lending to the small business community. Confirm that the bank is “small business” friendly!
How receptive is your bank with small business loans?
Do you work closely with the SBA (Small Business Administration)…if so is the bank on their Preferred Lending Program?
Do you (the lending officer) have individual authority to approve my request or is there a central lending committee that you submit my loan request to?
Once you gain some comfort that the bank will legitimately consider your loan request…keeping moving forward with the questions!
Is there a minimum percentage required with regards to my investment in the business?
Is there a minimum credit score? (If possible, run a credit report on yourself so there are NO surprises to you or your banker)
Will your bank require my personal guarantee?
Does the bank require a business loan application?
Does the bank require a current personal financial statement?
Do you require a copy of my personal tax return… if so how many years?
Do you require a Business Plan…if so what, exactly would you like me to include?
At the end of this question and answer period you should know what documents the banker will need to consider your loan request.
Having this conversation, three times will help you organize your thoughts and ultimately decide on which bank YOU would like to do business with….Before you go to the Bank!
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