If a Fortune 500 company called you up and asked you to put together a proposal, you would probably spend tons of time preparing. You would analyze the company, understand the competitive environment and figure out strategies to get the business.
Yet, when it comes to getting a business loan, business owners often fail to have this kind of zeal. Maybe the reason is that the prep work can be boring, tedious and technical. Another reason is that it may not be fun to look at your business in a realistic way. What will the banker find wrong?
But, in the current credit environment, you need to do a tremendous amount of prep work for even the smallest loans. Simply put, banks have tightened up their lending standards since the great recession, however there are signs of them loosening up.
What to expect
- You need to have a strong business case for the loan. How will the extra money grow your business?
- Do you have it modeled on a spreadsheet, which includes different assumptions?
- Have you found the most cost-effective ways to get your supplies and materials?
- Are your taxes filed?
This is the short list of expectations.
This kind of planning certainly takes lots of work. But keep in mind that this is the kind of effort that all successful businesses need to do. The right financing will come your way if you do your due diligence.