Preparing Your Small Business for a Bank Loan
Between bank loans and angel investors, bank loans are usually preferred simply because banks don’t take a huge chunk of your business control in exchange for the money. That said, bank loans are few and far between, and it’s important to set yourself apart from the crowd and show your bank loan officer why your business deserves their backing and support.
If a bank loan is what you’re after, there are steps you can take to position yourself attractively to loan officers. Here’s how.
Have a strong business plan.
If your business has done its homework, it will show in your business plan. Market research, projections, cost estimates—it all shows the bank that you’re serious enough to do some research and be informed, and they’ll need to be confident that you’ve got a good head on your shoulders if they’re ever going to give you money.
With a solid business plan behind you, you’ll be able to show your bank loan officer real numbers that support your vision.
Show success on your own.
Banks don’t invest in good ideas, no matter how good they are. They invest in real businesses with solid revenue goals and proven methods for sales.
If you’ve got hundreds of Facebook fans breathlessly waiting for your product to go on the market, excellent! If you’ve got actual order that need fulfilling, even better! The more your business can show it’s already got a following and just needs a boost to be able to follow its own momentum, the more likely you are to get that business loan.
Put some “skin in the game.”
You know how clichés become clichés? They start out as truths that are so true they must be repeated. Yes, every business loan blog you’ve ever read has advised you to put “skin in the game”—and for good reason!
Don’t approach a bank like a child asking for his or her allowance. If you believe in your business and its potential so much that you’d ask a bank loan officer to believe in your business enough to put money toward it, doesn’t it stand to reason that they would expect you to do the same for your belief?
Don’t build your own salary into your cost estimates.
Related to the point above, including your salary when requesting a bank loan isn’t likely to give a very good impression. Asking a bank to help support your business is acceptable. Asking a bank to support yourself personally while doing so might not be.
Register your business.
You know that you need to be more than just a walking idea. But the business plan is only half of that equation. When you choose an organizational structure and register your business, you’re taking one more step toward becoming a functional, operating company—just what banks need to see in order to be persuaded to give you that elusive bank loan.
Ready to get started? Let ClickAndInc.com register your business today!
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