Finance is a tricky subject. It’s not easy to know all the different financing options, and it can be even more challenging if you’re going into your first meeting without any preparation whatsoever! But don’t let these eight tips scare you – they’ll help make sure that nothing goes wrong when you talk with a lender to get a small business loan.
- Bring your completed business plan – Your potential lender will want to see your business plan and financial projections before lending you any money. Your lender needs to know where you want to take your company, and a well-organized business plan shows them that you have thought about your company’s future. They’ll also want to see a history of any business income and expenses if you are already in business or purchasing a business, as well as your personal credit score. Come to the meeting prepared with all this documentation so that you can prove that you’re a responsible borrower.
Also see: How to Write an SBA Business Plan
- Arrive early!!! – This may seem like common sense, but getting to the bank early will help reduce anxieties and give you time to prepare.
- Be honest – Don’t try to inflate or deflate numbers to make your business look stronger or weaker. This will only backfire and make the lender suspicious. If you’re not sure about something, ask!
- Bring a friend or advisor – It’s may be helpful to bring a friend or another business owner or advisor who knows about your business. Having another person with you allows the lender to ask questions of a different perspective.
- Have your tax returns ready – Make sure to have your most recent three years of tax returns, business financial statements, and personal credit history in order to show the lender that your previous borrowing history has been solid.
- Make sure you have enough collateral – Having sufficient collateral is critical for getting a loan, so make sure you have assets that you can put up as security. This could be your home, car, or other valuable assets that the lender can seize if you don’t repay the loan. The lender wants to see that you’re taking this process seriously and are fully committed.
- Accept criticism – When meeting with your lender, be prepared to listen to feedback – even if it’s criticism about your business idea or plan. Remember, the lender wants to see you succeed and is only giving you honest feedback so that you can make the most informed decisions possible about your business. Be sure to take notes and revise your plan for the next lender if you don’t get a loan.
- Be prepared to negotiate – If your lender doesn’t have the capital that you need, be prepared to negotiate for what you want. Maybe they can offer a term sheet or consider other options at their bank.