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How to Secure Bank Financing, Debunked

sponsored blog post by The Columbia Bank

sponsored blog post by The Columbia Bank

So you’re an entrepreneur and you’ve got a vision. Now you need the funding to transform that vision  into reality. Working with a bank may seem intimidating, but if you follow these simple steps your chances of walking away with a check in your name are greatly increased.

1.     Go local. Avoid having to call a 1-800 number. Find a community bank that typically lends to local businesses in your area. You can find the rankings of these banks through sba.gov.

2.     Research on programs. Before gathering all of your business data, check out the programs available to you. Some examples are Small Business Administration loans, VOLT funding and community grants. Also, its good know what collateral requirements may exist.  

3.     Put together an A-Team. Before meeting with a bank lender, make sure you have a CPA and corporate lawyer as resources.  Primary focus as a new business owner should be upper level management and logistics.

4.     Be prepared for personal meeting with a bank lender. Here are some tips:

a.     Have a short and concise business plan. Less is more, 2-3 pages max

b.     Have  resumes of your management team available

c.     Put together revenue projections. Focus on 2-3 years, month-to-month. Think this through and be prepared to answer questions on working capital needs and repayment. Hint: never walk into a bank and ask “how much” can I qualify for. This may show that you haven’t thought through what your monthly payments will be and how to repay.

d.     Pull your own credit report and ensure your existing business is in good standing on Maryland’s SDAT website. Also, feel free to search for UCC’s that may be outstanding.

e.     Be prepared to speak about your location. Examples are: leases (if you have them), specific documentation on equipment costs, exhibits for your sources/uses table. Be prepared to put 10-20% into the project yourself. Chances are you have already bootstrapped thus far to get up and running – so have your investment documented on an spreadsheet to show you’re putting in your own equity.

Not into bank financing? Crowdfunding is always an option, if it aligns with your long term corporate vision. If you’ve got shareholders, discuss succession planning with them. If the company grows rapidly, will they be willing to subordinate their debt to seek additional funding from a bank if needed? What is your shareholders’ long term plan for repayment?

Finally, don’t be afraid to ask local bank lenders questions.  If you’re not quite ready to apply but want additional information, pick their brains about financing programs that would be a good fit.

Best of luck!

Member FDIC. Loans are subject to credit approval.  The Columbia Bank is not associated with the Small Business Administration or Maryland’s Department of Assessments and Taxation.