Getting A Bank Loan - Part II
Last week, in Part 1, we talked about how to get a business loan from a bank by qualifying them like a prospective customer, including these steps:
- Who makes the decision?
- What do they need?
- How do they want it?
- What motivates them?
- How motivated are they?
- What do you have to do?
In the previous article we discussed the first three qualifying steps. Now let's finish this project with the last three.
What motivates them?
All banks need to make loans, but all banks don't like the same kinds of loans.
Some banks are set up to make working capital loans, and some aren't. Most banks make real estate loans, but each one has its own profile of what kind of real estate they will consider. And all banks like to loan money for things with serial numbers, like vehicles and equipment.
In your meetings, what your banker says about your proposal should indicate their level of interest in your type of loan. But if not, it's okay to ask.
Banks will fight for loans, but they'll kill for deposits. Checking account deposits are virtually free money to a bank, a portion of which they use to make loans. They like personal checking accounts, but they love business accounts.
A bank's motivation could increase if you have daily deposits of any size and are willing to place your operating account with them. You should know the value of your deposits to a bank and use that information to your advantage.
How motivated are they?
Typically, you can tell how motivated a bank is by how helpful the loan officer is. Her excitement is no foreteller of success, just of motivation. But if she seems indifferent or unmotivated, that's probably not a good sign.
A deal that couldn't get through the front door of Bank A this morning, could be received with a red carpet at Bank B this afternoon. So it's almost always a good idea to take your proposal to more than one bank.
Don't wait until you've been turned down by one bank to take your proposal to a second one. And be sure at least one of the banks you give your loan proposal to is an independent community bank.
What do I have to do?
Bankers love field trips. Give your bankers a demonstration of the new equipment the loan is for, or take them to see the building or land you want to buy.
Be sure to show them how the object of your loan request will help you grow your business, profits and deposits.
The best way to get a business loan is to do your homework, anticipate what your banker needs and get them what they ask for.
And if the bank that was loyal to you when you needed them doesn't have the best deal -- but it's a deal you can live with -- "dance with the one that brung you."
Write this on a rock... Getting a bank loan is like qualifying a prospective customer. Performing this process will significantly improve your chances of getting a loan.
Jim Blasingame
Small Business Expert and host of The Small Business Advocate Show
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