Create a Business Banking Relationship before Applying for a Small Business Loan

As your small business grows, you may find the financing and business plan you started with aren’t enough to move you forward. Or, you may be looking for a loan to keep up with current demand and expenses. If so, now’s the time to create a new growth plan, get to know a business banking officer, and start a small business loan application. Developing a banking relationship with a lender means you’ll have someone who understands your business and can walk you through the small business loan application process. However, before going to a lender, it’s important to collect your financial information and determine what you want to do with your small business loan, how much you think you’ll need to expand, and what collateral you’ll use to support your loan.

Get your financials in order

This is the first thing to do when you’re planning for a small business loan application. Compile business statements, accounts receivable and payable, assets, and liabilities (anything you would need to include in a financing request). Then look for areas that might prompt questions from a lender, like unpaid loans and outstanding accounts payable. Try to take care of these concerns before you begin a banking relationship and apply for a small business loan. A small biz CPA helps lower taxable income.

You should also prepare your personal finances for review. You are your business, and in order to gain a better understanding of your financial position, your lender will want to examine them before approving a loan. Now is also a good time to decide what assets, both business and personal, you could put up for collateral to obtain a new loan. If you’re not sure how to get started, find a lender who will work with you to get you ready for a small business loan application. They’ll have in-depth conversations with you about your numbers and your company, as well as help you with your credit application.

Create a plan to use your small business loan

How you want to use your loan will help your lender determine what loan is best for you and how much you need to borrow (sometimes it’s not as much as you think). Talk about your business plans with your business banking officer or relationship manager. Whether you’re looking for working capital, a loan for new equipment, a debt restructure or a way to cover payroll and healthcare costs for the short term, they can help. Show them how your business is doing, what you plan to use the money for and why it’s important to your continued success. You should also use a business loan calculator to find out how a new loan would affect you financially. It will show your existing debt as well as your new total debt with the loan and a potential monthly payment to help you get a better sense of your financial obligations with the loan.

In the past, lenders would look primarily at financials, but with a fluctuating economy, it’s become more important to examine the big picture. One of the perks of a business relationship when you’re applying for a small business loan is that your banker will look at how the market is affecting your numbers and how well you’re doing in spite of that, because they truly understand your business. Showing them your business plan will help them go beyond numbers and get to know the heart of your business, which could improve your chances of being approved.

How does the financing process work?

Once you’ve established a banking relationship, it’s time to prepare a financing request and apply for small business loan. The goal of a business banking officer (or relationship manager if you’ve borrowed from a bank before) is to make your application process as smooth as possible. They want to be sure they have all the information needed to present your case to their underwriting team and get you approved. They also know you don’t want surprises in the middle of your small business loan application process, and that the best way to ensure approval is to cover all your bases before you apply. They’ll walk you through the process and provide you with realistic expectations for approval. In the UK, you can easily get Short Term Loans from Pounds to Pocket to get you started with your small business.

Why is building a business banking relationship important?

A business banking relationship doesn’t just improve your chances of being approved for a loan, it’s also a gateway to other great banking services. Whether you’re looking for cash management solutions, a business checking account or employee credit and debit cards, having a business banking relationship means you have access more personal banking. Your banker will work with you over time to ensure your business is getting what it needs to grow and prosper, and the better they know you and your business, the easier this becomes. So take the time to prepare a pitch for your business and get to know your banker. You might be surprised by the rewards the relationship gives you.