Brooklyn's Progress
November 2004

By Jeannie Marmol

Getting a bank loan may be an overwhelming task for many business owners.  However, there are several steps that you as a business owner can take to make this process less cumbersome and have it go in your favor.  One of the first questions that bankers are concerned about when a business client asks for a loan is, “how long have you been in business?”  If you’ve been in business less than two years, then the process for your loan is different and more complex compared to someone who has been in business two years or more.  Companies established less than two years are required to present a business plan.

It is critical that a business owner understands the various requirements that must be met based upon their specific situation.  Here are the top 10 steps all business owners can take to increase their chances of securing a loan:

1) Get a handle on your personal finances.  Know your credit score and if it is low immediately start to work on increasing your score by consolidating your debt, removing any errors from your credit report, etc.

2) Prepare three years of financial statements and tax returns for you and your business.  If you have not been in business that long just put together everything you have including sales projections.  Do a cash flow analysis showing how you plan to use the loan and make the monthly payments.

3) Be prepared to sign a personal guarantee.  Most bank loans are guaranteed through the Small Business Administration (SBA), which states that any individual owning more than 20 percent of the business must sign a personal guarantee.

4) Have a business account with the institution you are planning to use.  Having a banking relationship with the financial institution you are planning to use will help you build a stronger case for your loan.  They will see that you have a vested interest in the institution.

5) Understand the C’s of Credit (Character, Cash flow, Capital and Conditions).  Bank officers want to know that you are a person with good moral character.  In other words, that you are serious about your business and doing everything you can to make it successful.  Cash flow, capital and conditions all refer to your knowledge of what you are doing and how much you have to contribute.

6) Put together your résumé.  All co-owners of the business should provide up-to-date résumés clearly showing experience in the industry.

7) Be honest.  Be candid with yourself and the bank.  Understand your advantages and disadvantages and be prepared to have solutions for possible conflicts.

8) Apply early for the loan.  Do not come into the bank stating that you need the money by the end of the week.  The bank officer needs time to review the application and make a decision.

9) Show up for your appointment at the bank on time, prepared and well dressed.  Think of your meeting with the bank as an interview.  Bank officers want to see that you are serious, confident and know what you are doing.

10) Build a relationship with the bank officer.  The more often you come into the branch and the stronger your rapport is with the bank representative, the easier the process will be.  Remember, it’s not just what you know but who you know.

Jeannie Marmol is Assistant Treasurer with JPMorganChase’s Flatbush branch # 50.  Ms. Marmol was ranked number one Chase Banker in her market.  She may be reached at 718-859-5101 ext. 31, or at Jeannie.f.marmol@chase.com.