Puget Sound Business Journal (Seattle):

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While those tried-and-true guidelines, capacit y to repay, existing capital, collateral, businesx conditions and personal character, are still important, the one thin that may best determine whether a business can secure a loan from a bank iswhether it's done its homework. Experte say banks are far more likel y to say yes to applicantsz whoarrive prepared. The American Bankingt Association (ABA) offers a list of questions on its Website ( ) that it advisew businesses to use to self-evaluate beforr approaching a bank, including: How much money are you goinh to need? What is the moneyy going to be used for? How will you repah the loan?
How much can you afford to lose and still maintain a viable operation? What risk management measures have been or are to be implemented? What have been the trends in the business'sx key financial position and performance indicators? "Banks are looking for someone who has done their homework," says Jameas Ballentine, Director of Grassroots and Community Outreach, Americanm Banking Association. "A business smallp or larger should go inlike it's a job interview and they shoulds be interviewing the bank to see if it's a lender they want to work with just as much as they're beingb interviewed.
" A business should have all relevanft records at the ready, from a current balancwe sheet to past and projected cash flow and informatiojn about personal debt and equity already invested into the The centerpiece of that informatioh should be comprehensive business plan. "That's the most importanft piece," Ballentine says. A good plan show s that a business has vetted its idea and testex its assumptions against the current existing and future competition andother factors. Ballentinwe tells the story tell story of a business ownet who wanted to open a coffee He had a solid backgrouned and theright attitude, but was turned down for a loan.
When he askeds why, he was told it was because there were a dozenj existing coffee shops already in the Terry Mooers, a business opportunity specialist with the Small Businesx Administration (SBA), says many smalp businesses find key assistance with outsidew help. In many cities, locao chapters of the Service Corps of RetiredExecutivesz (SCORE). "Many small businessese don't have that experience and they don't know wherde to begin," she says.
The SBA does not directluy give loans but instead works tohelp under-write and make more affordable loans written by banks througg a range of specifix programs, many aimed at minority-owned businesses or those based in designate d economically distressed areas. The SBA offers extensiv advice for businesses seeking funding at its Website ( ). "It can be a difficultg process for a small business and banksw are looking for very specific informatiojn to givethem assurances," Mooers added. "Witb a little help, it can be much easier and less stressfupl forthe business.
" Banksd of all sizes usually are willint to provide business loans, so very large or very smalo banks shouldnt be ruled out when considerin g where to seek a loan. Ballentine says businesseas should consider coming up with a shorty list of institutions to targer and then seek to find the rightr fit forboth parties. A business shoulr also allow ample time for the bank to make a A request for a decision on the spot or a rush answere may be ared flag, unless the circumstance s truly warrant an expedited process.
Once a loan is in place, a businesd must work on maintaining a good which starts by making paymentxs on time and keeping the banker informed of any new development s within a business that couldaffect cash-flow and the abilit to make payments, either good or bad. "Evehn the best businesses are faced with adversities from timeto time, says Ballentine. "Communication is important not only in the initial request but throughout the wholecredit process." "Bankers don'gt want to turn people down," Ballentine says. "They are in businesss to make money, but they also like to be part of buildin g something in a community and they want it to be asuccessfukl transaction.
Doing the legwork makes it possible for it to be a smootj transaction forall parties."