Loan Preparation: It’s About Relationships
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If you’re preparing to get financing from a bank, you’ll need to prepare well. You’re not just securing a loan, you’re beginning a relationship with a strategic business partner who will want to understand your business goals and needs. Here’s what you can expect and how to best prepare for the process.

If you’re preparing to seek financing from a bank, you’ll need to prepare well. You’re not just seeking to secure a loan, you’re beginning a relationship with a strategic business partner who will want to understand your business goals and needs. Here’s what you can expect and how to best prepare for the process.

The first step in securing a business loan is finding the bank best suited for your needs. “For a business owner, choosing a bank is more than simply choosing a lender,” says Drew Outzen, senior vice president, business banking underwriting manager at Regions. “Choosing a bank requires that business owners really understand what their total banking needs may be over time so they can then identify which banks are best positioned to meet those needs.”

Additionally, small business owners should look for a bank they can view as a strategic partner. “A good banker will understand your industry and want to spend a significant amount of time understanding your business goals before he or she tries to sell you anything,” says John Eubank, senior vice president, business banking at Regions.

Preparing documentation

When you are ready to discuss a possible business loan with your banker, you can help ensure a smooth process with sufficient preparation. Outzen explains that applicants can expect to have a detailed conversation about their business and the purpose of the loan. Of course, you’ll also be asked for documentation that demonstrates the financial strength of your business and your ability to repay your debt. Be sure to research loan eligibility criteria and the required documentation prior to your meeting. Requirements vary depending on the size of the loan and the type of the collateral securing the loan, but common requirements include business tax returns, personal financial statements, balance sheets, and a strong business plan.

It’s not uncommon for an applicant to be missing one or two of the required elements which can lengthen the loan application process, so do your homework, advises Outzen. Your bank may also require documentation that supports your loan’s purpose. “For example, if the borrower wants to purchase a building, a signed sales contract between the borrower and that seller would be required,” he says.

The story behind your statements

Although financial information is a big part of the loan application process, the story behind your financial statements is also important. “Look over the information requested as objectively as you can and ask yourself, ‘Is there any supporting information that I can provide that will adequately address any anticipated questions?’ For example, say you are being asked to provide three years’ worth of financial information, and in the middle of that time period, your business reported a loss. Having a thoughtful and thorough explanation of how and why that loss occurred, what you did in response to that loss, and how your actions corrected that loss the following year would be extremely helpful in the process,” says Outzen.  

Eubank emphasizes that businesses should be prepared with not just financial statements but strong business plans. “You want to show your banker that you have put a lot of thought into what you are trying to accomplish and that you have an understanding of the impact that servicing that debt will have on business operations,” he says.

The likelihood of your business loan being approved depends on a variety of factors including your credit history, terms requested, and collateral. If your bank is a true strategic partner, it will help you analyze whether a particular loan is best for your business. “We believe in shared value: developing sustainable relationships that are driven by serving the long-term interests of our customers and communities,” says Eubank. “When our customers win, we win, too.”

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This information is general in nature and is provided for educational purposes only. Regions makes no representations as to the accuracy, completeness, timeliness, suitability, or validity of any information presented. Information provided and statements made by employees of Regions should not be relied on or interpreted as accounting, financial planning, investment, legal, or tax advice. Regions encourages you to consult a professional for advice applicable to your specific situation.