Approaching a Bank
Now that you have all of the
information needed when looking for business loans, it is time to approach the
bank. Many people usually go with the bank that they have done business with for
years for their personal banking matters. However, if you are looking for a
startup or an expansion loan for your small business then it may be in your best
interest to first approach a local bank that has a few branches in your area.
With the difficulty regarding obtaining credit in today’s lending environment,
approaching a money center bank (ie..a bank with thousands of branches) may not
be in your best interest. These banks, especially since the fallout from the
housing market, have sharply cut down on their small business lending. However,
smaller local banks typically make loans directly within the geographical
regions. The bankers at these small banks, credit unions, or finance companies
are well aware of the local economic climate, which businesses are doing well,
and they will be able to provide you with insight into your lending needs more
so than a commissioned loan officer at a major bank.
Additionally, and this is
extremely important, you will be working with the individuals that will make the
lending decision regarding your business loan application. As such, you can
usually make a strong presentation directly to these people regarding your
business, your credit history, and available collateral. Although it may seem
that it is easier to obtain a loan from a small bank – it is not. You and your
business will still be required to have the credit, collateral, and cash flow in
place in order to secure your business loan.
On a side note, you may want to
ask your local CPA which small banks in your area are most friendly when it
comes to small business borrowing. Additionally, your CPA usually has extensive
connections with local business people in your area, and they may be able to
present your loan case with you to the credit decision board of your local bank.