The loan application process can be intimidating to say the least. For small business owners, this access to capital is not only necessary, but can often times be the determining factor in whether or not their business sinks or swims (in Michael Phelps fashion, of course). So, how exactly does a small business owner go about obtaining the loan of their dreams? Here are some simple steps that should address your concerns and hopefully help put your mind at ease.
1) Be concise. Be clear.
You wouldn’t pitch an investor or a potential client by simply providing a copy of your financials, would you? When meeting with a loan officer, you should approach them just as you would a potential investor. First and foremost, paint them a picture of just what your company does. Don’t make them try to guess or fish around for information, lay it all on the table. Make it as easy as possible for the loan officer to understand not only your business, but also the external and internal factors that play a role in the operation of your business.
2) Financials, budgets, and assets, oh my!
While gathering and presenting all of this information can be quite a daunting task, both you and your loan officer will find it mutually beneficial if you present your financials in an aesthetically pleasing way. Do not, and I repeat, do not overwhelm the loan officer with hundreds of pages of financials, assets, and tax returns. Too much information is overkill. Your job is to make it easy for the loan officer to decipher whether or not your business qualifies for a loan. In short, the easier you make it on them, the easier you are making it on yourself. Summarizing is critical to this aspect of the loan application process, just as it was in describing your business. Be open, and be honest, because any information you try and hide will most likely surface at one point or another, and that won’t pay off for either party. In terms of what information should be included in these summaries, this post from Forbes provides a lot of great insight.
3) There’s no such thing as over-preparedness.
It’s certainly tempting to get a jump on the process before fully understanding just what’s involved, but you may end up paying for it in the long run. In the case of applying for a loan, it is in your best interest to anticipate everything and anything a loan officer might want to know about your business prior to the moment they actually ask. Approaching the situation more than prepared will put you in a much better position coming out of the gates, and put you one step closer to being approved for that loan.