A business banker recognises that local companies are important to community growth, creating jobs, advancing technology and contributing valuable tax dollars to the economy
By: Hitesh Khan/
Good lenders must first recognise that not only are small businesses are important, but that every company is different and requires customised financing. Good lenders will have the knowledge, expertise and the corporate resources to meet your needs, all at the high level of quality service that you can expect from the lender.
Lines of Credit
If you need the flexibility of access to capital, good lenders can design a line of credit program to suit your needs. Use it to better manage your cash flow, take advantage of special purchase opportunities, or for emergency situations.
A business banker who recognises that local companies are important, is able to offer revolving lines of credit, competitive interest rates, interest only payment options, and an easy extension process.
Secured and Unsecured Installment Loans
A term loan, either secured or unsecured, is most often the option that business customers choose when borrowing money to finance business needs.
Ask good lenders about financing for:
- Furniture and Fixtures
- Debt Restructuring
Small businesses are important to community growth, creating jobs, advancing technology and contributing valuable tax dollars to the economy. To help small businesses compete in today’s competitive marketplace, good lenders often provide government guaranteed financing to qualified business borrowers.
A partnership with a business banker benefits small-to-medium companies which think big and have the management experience to turn plans into reality.
If you have a worthwhile business expansion or investment need, good lenders have medium and long-term financing programs available at competitive rates. Such loans can be used for the following business purposes:
- Construction of new commercial buildings
- Purchase of existing land or buildings
- Business acquisition
- Renovation and improvements
- Financing equipment, furniture or fixtures
- Finance increase in inventory
- Working capital
But before applying for loans, you should know what your business banker is looking for and prepare for it:
- Character and credit history of the borrower
- Loan documentation: financial statements, tax returns, and a business plan
- Cash flow history and projections for the business
- Collateral that is available to secure the loan
Get a credit report on yourself and your business. The smaller the business, the more closely the experience, know-how and overall character of the owner(s) will be evaluated. You are often judged on your personal credit – especially if your business does not have a long operating history.
You need to build a credit history to give banks an idea of how responsible you are – they will assume that you operate your business in the same manner that you manage your personal finances.
- You need to monitor what banks see when they pull your credit report.
- Check your credit report well in advance of seeking a loan because it can take up to four weeks for errors to be corrected.
- Continually monitor your credit to check for errors or omissions.
- Know your credit score. The higher the score, the lower risk you pose to lenders — and the lower interest rate you will be able to secure.
- Every commercial lending application you submit will be listed on your credit record – if you are turned down by one lender, the next will see that you were declined already. Make sure to do everything you can to get it right the first time.
Be prepared to have several key documents on hand before you even set foot in a bank. These should include personal financial statements, tax returns, monthly cash flow projections, and a well-prepared business plan.
You will need financial statements for your business to show how much it’s worth and how much money you are making. Prepare detailed pro-forma statements. These give projections about what your business will be worth going forward. Be sure you have an updated business plan. Prepare a plan with as much detail as possible – including bios of you and your partners, your track record, your strategies and advantages, and more. Supply a well-organized plan of how you intend to use the loan.
The most important component to a business banker is whether the business’s ongoing sales and collections represent a sufficient and regular source of cash for repayment on a loan. A business’s cash flow will usually include not only the money that goes in and out of the business from its operations (sales less expenses), but also any cash flow from investments or financial activities (e.g., payments and receipts of interest and dividends, long-term contracts, insurance, sales or purchase of machinery and other capital changes, leases, etc.)
You may need to provide collateral. Collateral may be defined as property that secures a loan or other debt, so that the property may be seized by the lender if the borrower fails to make proper payments on the loan.
In order to ensure that the particular collateral provides appropriate security, the lender will want to match the type of collateral with the loan being made. For example, the useful life of the collateral will typically have to exceed, or at least meet, the term of the loan. Consequently, short-term assets such as receivables and inventory will not be acceptable as security for a long-term loan, but they are appropriate for short-term financing such as a line of credit.
If you are searching for a business expansion loan, you should speak to loan consultants as they can set you up on a path that can get you a it in a quick and seamless manner. Loan consultants have close links with the best lenders in town and can help you compare various loans and settle for a package that best suits your needs.