When you hear all the negative talk about our economic situation it is hard for most business owners to think about borrowing money to further expand their business. The credit market right now has tightened up a bit but if your business is well run and properly organized you can still get the money you are looking for.
When you are getting ready to apply for a business loan there are some basic things that you should do before you apply. This way you not only make a good impression but you will also stand a better shot at get your loan approved. Something that I have learned along the way is a bigger bank is not always better, in fact if you have a community bank in your area you should start there.
Small Bank versus Large Banks
I will tell you why this is. When you go to the larger banks they have set standards already in place and you can be highly qualified and still be turned down. This is because they are not looking at your business specifically, they are looking at a set of rules they have put in place. This is what happened to us, we owned a construction related trade and the major national chain bank took one look at our paperwork and said, "No we are not loaning money to an economy driven business." This was 6 years ago when it was booming.
After getting flustered I then went to our local community bank. They took a look at all our paperwork and actually looked at what our company had been doing the previous five years-growing. All of our finances were sound so they said, "sure you can have the loan." They only required us to keep all of our money deposited with their bank. That was an easy choice after the way were turned down from a bank we had used for over ten years.
Get Organized First
Here is my advice to you before you actually go to apply for your small business loan. Get everything in order. For example you should have all of your company's tax returns for the last three years. You will also need the last three year's tax returns for every officer of the company so have those ready. Most banks will like to see your last quarter's profit and lose statements also. If you want to make a good impression have a copy of all these returns that they can keep.
After 9/11 banking regulations were tightened so you will also need to have copies of all your filings with your state and all of the necessary federal filings. These usually are your Articles of Incorporation that you filed with the state and your Employer's Identification Number. They want to see that you have properly applied for and received the necessary paperwork to run a business. If all of your officers are not able to attend the application process take with you a copy of their driver's license as you will also need to show identification.
Hopefully these small business loan basics will help you get your business loan more easily. Remember that if the larger bank turns you down it most likely has nothing to do with you, it is them. Take your business elsewhere.