Home Business Loans Tips for working with a lender
Tips For Working With a Lender

Steps to Prepare for a Loan Request:

  • Have a well thought-out business plan
  • Invest money yourself – establish owner equity
  • Provide financial information – about yourself and the business.  Understand the financial statement and be able to communicate the story it tells.  (There are free and fee-based resources in your community that can help you).  Include:  

ü  Income and Expense Report & Balance Sheet

ü  Tax Returns

ü  Cash Flow Projections

ü  Personal Financial Statement

ü  Other as required:  Debt Schedule, Accounts Receivable Aging, Accounts Payable Aging 

  • Include a Statement of Purpose for the Loan Request.  How much is needed and what specifically will the loan funds be used for?
  • How and when will the loan be repaid? 
  • Know your Personal Credit Report – fix the problems.  Good credit scores are valuable!
  • Collateral is required – what collateral is available to secure the loan?  What is its value?  Remember the Lender will discount the market value.

 Set Appropriate Expectations:

  • Select a Lender you feel comfortable with and is responsive and helpful.  A good relationship with your Lender, Accountant and Attorney provide valuable resources and guidance.  
  • Personal Guarantees of the owner(s) will be required
  • Interest rates are set based on the risk assessment of the loan.  Higher the risk, the higher the rate. 
  • Plan for loan fees and closing costs
  • Allow a reasonable amount of time for Lender to underwrite and analyze the loan request
  • Be prepared to supply necessary documents such as business entity papers, written estimates, purchase agreements, list of assets available for collateral, proof of insurance, etc.

Considerations after a Loan is Received:

  • Financial Information:  The Lender will require periodic financial reporting such as submission of tax returns and financial statements.  Always submit accurate and timely reports or you may be considered in default of the terms of the loan agreement. 
  • Communication:  keep your Lender informed of the business activity – both positive and negative trends.  Your Lender may offer guidance and provide access to other resources available based on the need.  Your Lender wants you to be successful.  Keep in touch.
  • Follow-up:  Always provide timely submission of any documentation requested by your Lender such as proof of insurance, signatures on agreements, titles for assets used as collateral, etc.