Strategies For Securing a Commercial Loan
Most small businesses will, at some point in their life, go to a bank or other lending
institution to borrow money for expansion of their operation. Many small business
owners, however, initially fall victim to several of the common and potentially
destructive myths that concern applying for loans. For example, first-time borrowers
• Lenders are lined up and eager to provide money to small businesses.
• Banks are willing sources of financing for start-up businesses.
• Loans are obtained by talking the lender out of funds.
• When it comes to seeking money, the company speaks for itself.
• A bank, is a bank, is a bank, and all banks are cold, impersonal institutions.
• Banks, especially large ones, do not need and really do not want the business of
a small firm.
Research shows that 67 percent of all small businesses that borrow money get that
money from commercial banks. This places banks among the largest sources of credit;
and makes them one of the most vital components to small business survival.
Understanding what your bank wants, and how to properly approach them, can mean
the difference between getting your money for expansion and having to scrape through
finding cash from other sources.
A Mile In The Banker’s Shoes
There is a name for people who simply walk into a bank and ask for money…Bank
Robbers. To present yourself as a trustworthy businessperson, dependable enough to
repay borrowed money, you need to first understand the basic principles of banking.
Your chances for receiving a loan will greatly improve if you can see your proposal
through a banker’s eyes and appreciate the position that they are coming from.
Banks have a responsibility to government regulators, depositors, and the community in
which they reside. While a bank’s cautious perspective may be irritating to a small
business owner, it is necessary in order to keep the depositors money safe, the banking
regulators happy, and the economic health of t