When your small business starts growing, you might notice that your original financial plan isn’t enough to support this expansion. You could also need a loan to cover day-to-day expenses. If this sounds familiar, it’s time to come up with a new growth plan, connect with a business banking officer, and start the process of applying for a small business loan. Building a good relationship with a lender can give you valuable insights and help you through the loan application.
**Get Your Financial Documents in Order:**
The first step in applying for a business loan is organizing your financial documents. Gather all the information you need, such as business statements, accounts receivable, accounts payable, assets, and liabilities. Address any issues that could be problematic, like unpaid loans or overdue accounts payable, before you approach a bank. A small business CPA can also help you minimize your taxable income. Make sure your personal finances are ready for review too, as lenders will look at these before approving your loan. Decide which business and personal assets you’re willing to use as collateral. If you’re not sure, a lender can help you prepare for the loan application process.
**Create a Small Business Loan Plan:**
The reason you need the loan will determine the type of loan and the amount you should apply for. Talk to your business banking officer about your plans. Whether you need working capital, new equipment, to reorganize debt, or funds to cover short-term expenses like payroll and healthcare, they can guide you. Sharing your current business situation and future plans helps the bank understand why the loan is important for your ongoing success. You can also use a business loan calculator to see how a new loan would affect your finances.
With the current economic uncertainty, lenders look at more than just your financials. Sharing your business plan helps them get a better understanding of your business, which can increase your chances of getting the loan.
**The Loan Application Process:**
Once you’ve built a relationship with a bank, get your funding request ready and apply for the loan. A business banking officer will help make the application process smooth. They ensure all the necessary information is available for the underwriting team and provide realistic expectations for approval.
**Why a Good Business Banking Relationship Matters:**
Having a strong relationship with your bank doesn’t just help with loan approval; it can also give you access to other helpful banking services. Things like cash management solutions, business checking accounts, and employee credit and debit cards become more personalized. Your banker will work with you over time to make sure your business gets the resources it needs to grow. So, prepare a strong pitch for your business and maintain a good relationship with your banker—the benefits are significant.