Published December 2005

How to get the money
you need to fuel your biz

By John Nelson
Guest Columnist

The next few months are the time to determine your needs for 2006. Make sure you get the money you need and secure the right banking relationship to take advantage of the opportunities that are ahead. Consider the following tips to help make your growth plans become reality.

• Profile your business. Provide a business profile that describes your business. Include annual sales, number of employees, length of time in business and an ownership breakdown so the lender has all the information he or she needs to consider your loan request and your ability to repay it.
• Show the numbers. Provide current, accurate and independently generated financial information. Offer financial information for anyone who owns 20 percent or more of the business, including owners, partners, officers and stockholders.
• Have a business plan and be able to talk about it. Lenders want to know precisely how your business operates, how you make money and how the money will be used. Provide a feasible cash-flow projection that explains how you plan to repay the loan and over what time frame.
• Credit scores count. A good credit score can be the single most important factor to determine whether or not your loan request is approved. Be familiar with your credit history in advance of your meeting with a potential lender and be prepared to explain it.
• Select a good team. It takes a team of trusted professional service providers to efficiently run your own business, so surround yourself with trusted CPAs, attorneys and industry mentors who can offer help and proven advice when you need it.
• Demonstrate that you have “skin in the game.” Expect to contribute some of your personal financial resources to the deal. Chip in a percentage of the amount you are requesting. If you are not willing to risk significant personal finances by investing in the business, the bank won’t want to, either. If you are just starting up, consider funding your own launch. Downsize personal assets or borrow money from a private party before asking to borrow from a bank. And don’t expect the bank to provide venture capital with a business loan. Banks tend to be more conservative in their lending policies than are venture capitalists.
• Get feedback if you’re not approved. The lender is required to provide you with the reasons your loan request was turned down. Learn from this feedback and apply again after you have adequately addressed the issue. This information can only help the next time you seek financing.

When you need a loan, choose a banker who understands the business you are in and can demonstrate extraordinary care and attention to meet your needs. Ask other respected business owners for their recommendations.

Then present your case for a loan by following these tips so you can be well on your way to achieving the business growth you’ve planned all along.

John Nelson is a vice president and business banker at Cascade Bank in Everett. For more information, call 425-259-8566 or e-mail jnelson@cascadebank.com.

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