Securing the small business loan you need

Marc Timm

Gather your paperwork

Be prepared to support your loan request with necessary documentation. For new businesses, such paperwork may involve providing the lender with a business plan. For existing businesses, banks may require up to three years of tax filings and operating statements to develop confidence in a company’s stability and long-term prospects.

Have a payback strategy

No matter the size of the loan requested, lenders want to know they’ll be repaid in full and on schedule. Develop a payback strategy before meeting with a banker. If the funds for repayment will be generated from business operations, be ready to show past performance as well as future projections. Lenders typically want to see that businesses can more than cover their payments.

Be prepared with collateral

A lender will want to secure a loan with something of value, so be ready to offer collateral. Often, collateral is real property, such as a personal home or car. Collateral could also include the assets of a business, such as inventory or equipment, as well as personal or business investments or cash deposits.

Evaluate additional options

If a loan application is denied, all is not lost. For small businesses that have failed to secure a loan through traditional channels, the Small Business Administration (SBA) can provide some assistance. Although the SBA itself doesn’t issue loans, it can help secure a loan and works through preferred lenders to help qualifying companies through the process.

Develop a banking relationship

A long-term relationship with a banker can offer business owners many benefits: a banker will develop an understanding for the company’s activity and growth and may be able to suggest products that could improve cash flow efficiencies while keeping costs in check.

SBA-approved lenders, in particular, can guide borrowers through the various loan options available, from launching a business to obtaining real estate.

Whatever your business’s financial need, talk to your banker to consider all of the options available. Small businesses are the backbone of many communities, and banks want to support the growth of these companies, which improves the economic stability of their communities.

Marc Timm is senior vice president of commercial banking at Sterling Bank. He can be reached at marc.timm@bankwithsterling.com.

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