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How To Get A Small-Business Loan
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Article 8: Understand The Finances Of Your Business
Good lenders want to know details about your business, and will probe until they are satisfied.
Help the process along by understanding your own financial statement, your debt schedule and other financial aspects of interest to the lender.
Lenders’ jobs are more difficult when the business owner isn’t familiar with such details. If you aren’t, become familiar, or bring along someone who is familiar, such as your accountant.
It should be easy for an owner to explain the need for the loan and how it will be used, but those details oftentimes aren’t communicated well. Your chance of success in getting the right kind of loan can depend on it.
A borrower might think that working capital is needed, but a little probing may reveal that the money is to be used to buy out a partner, which could require longer-term financing.
A good lending agent or business development officer will know what the lender’s loan committee needs to see to approve the loan, and can help you provide that data. It’s vital to get the right information into the pipeline to begin with in order to package it appropriately for the committee.
All of this underscores the importance of finding a lender who will guide you through the process, and the necessity that you provide a complete and understandable package of data for the lender to work with.
Experienced lending agents can be more helpful than newbies, and one experienced in your industry even more so. You’ll also find that the clarity a good lender brings to your financial understanding of your own business can be leveraged in other areas.
“The more seasoned and focused we are, the more the bank can offer different ideas,” says Comerica Bank Vice President Nancy Russell.
She recommends that borrowers learn, “to use the banker like an attorney or CPA” by developing the similar close working relationships.
“The more we know about them and their business, the more we can work with them for their goals,” she says.
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