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Five Steps to a Successful Business Loan

 
1. Choose a Lender
 
It's best to set up a banking relationship when you don't really need the money. When talking with prospective bankers, explain your business and its cash needs, then find out if the bank provides an easy-to-understand loan documentation process, responds quickly to loan requests, and has small-business-loan specialists.
 
2. Be Prepared
 
An established banking relationship can help speed up the loan approval process, but when it comes time to actually borrow, the byword is "Be prepared." You should be able to clearly outline your company's history, products, and services; explain what the money will be used for; and show how it will be repaid.
 
3. Submit Complete Documentation
 
Incomplete documentation is the most frequent cause of approval delays. At most banks, the followng will be needed to support your loan request:
 
  • CPA- prepared business financial statements or business tax returns for the last three years;
  • Current interim business financial statements, if over six months has elapsed since your fiscal year end;
  • Owner's personal financial statement and personal tax returns for the last three years;
  • Business principals' tax returns and personal financial statements for the past two years;
  • Secondary source of repayment. (Sole proprietors and corporate principals are usually asked to secure loans with personal assets. If you're in a partnership, a personal guarantee must often be signed by all principals.)
 
4. Provide "Intangibles"
 
Numbers on loan documents don't always tell the whole story. There are intangible assets some banks will consider, such as how much experience you have, whom you're competing against, whether you're in a growing market, and whether your product or service is unique. Making sure your banker is aware of such information can increase the probability of approval.
 
5. Enlist Your Banker's Help
 
It takes bankers just as much time to review an incomplete loan application as it does a complete one, so it's to the bank's advantage to have a professionally trained representative to help guide you through the process and ensure that all necessary documentation is correctly completed. Never hesitate to ask questions. Your bank representative's expertise can help you avoid common pitfalls and ensure that you get an answer as quickly as possible.
 
For more information, Wells Fargo may be reached at (800) 359-3557
 
 
Source: Wells Fargo ,1991