3 Keys to Getting a Bank Loan for Your Business to Keep Growing

Got a vision for business growth that’s bigger than your wallet?

It might be time to make friends with the bank. 

Or, at least, become much better acquainted! 

Today, we’re breaking down key tips for getting your business funded with a bank loan.

Put on your dress shirt, shine your shoes, and let’s build a funding relationship with your bank. 

At New Economy, we’ve helped our clients raise over $75 million in capital. 

For many of our clients, raising capital wasn’t about pitching to fancy VCs (venture capitalists). 

It was landing a tried-and-true, humble bank loan. 

We’ve found these three keys to securing a loan to grow your business: 

1. Organized, Persuasive Financials
2. A Strategic Business Plan
3. Knowledge of Your Credit History 

Let’s turn those dreams into dollars! 

Key 1: Money Talks, But Financials Shout 

Don’t let the word “financials” scare you. 

It’s your business’s story, but with numbers instead of words. 

Here’s what lenders are really looking for:

• Healthy Business, Not Lottery Ticket: Show them you’re not a one-hit-wonder, but a sustainable, profitable venture who is prepared for the long haul.
• Financials Are Your Resume: Your Profit & Loss statement, Budget, and Balance Sheet are your business’s resume. Make sure they are clean and up-to-date.
• Cash Flow is King (or Queen) (or President): Make sure you can demonstrate strong cash flow. Check out our free cash flow projection tool which can help. 

Pro Tip: Organize your records like your business depends on it. Because in many cases, it does!  

Key 2: The Business Plan: Your Dating Profile!

Think of your business plan as a first date with the bank. 

You need to woo them with your vision, strategy, relationship experience, confidence, and potential. 

• Your Love Letter: Tell them what your business is all about, why you’re so passionate about it, where it’s headed, and why they should invest in your love story.
• Show Off Your Smarts: Market analysis, competitor research – prove you’ve done your homework and know your stuff.
• Financial Projections: Show them the money – the money you’re going to make them with your brilliant business.

Pro Tip: Be ambitious, but realistic. Lenders love a visionary who’s also got their feet on the ground.

Key 3: Credit History: The Ghosts of Your Financial Past 

Your credit history shows highlights (and lowlights) of your past money adventures.  

A history of bad credit doesn’t necessarily exclude you from a loan, but you need to demonstrate you’ve since taken responsible action to set things right. 

Work towards paying off any debts and building back up your credit score, otherwise, they’ll come back to haunt you. 

Some banks will have strict criteria for what they’ll allow historically for someone to be eligible for a loan, but others are flexible, especially if you’re able to win them over with your current financials and business plan. 

Remember that both your personal and business credit histories will be considered when applying for most bank loans. 

Pro Tip: Check your credit report before you apply for a loan. It’s better to face any financial ghosts now than have them surprise you later.

Reminder: Shopping Around is Okay!

You don’t need to limit yourself to your current bank. It can take a bit more effort to find a new place for a loan, but each has its advantages. 

Pros of Getting Loans from Your Current Financial Institution 

• If you already have a good working relationship, it may be easier for you to manage communication channels, and know what to expect.
• Your “home” bank may have discounts for long-standing clients.
• It can be a real sanity saver to have all your finances in the same place. 

Pros of Shopping Around

• You might find some favorable rates and terms for new banks looking to woo you. 
• Some banks will be more flexible in terms of offering loans if your credit isn’t stellar. 
• You may find a new bank with incredible customer service, and decide to switch all your banking over at some point (that may be part of their “evil” plan, after all!).
• Some online lenders are extremely convenient and price-effective (but do your homework to ensure you’re not being scammed).

3 Key Takeaways

At New Economy, we want to help you flourish by taking control of your finances and getting the financing you need. Here are 3 key takeaways:

1. 1. Make sure your financials and business plan are organized and showing your growth and potential. 
   2. Become familiar with your credit history so you don’t scare your lenders. 
   3. Shop around and don’t forget about credit unions! You may find some more favorable rates and terms.

There you have it 🙂

New Economy Team Members are Experts in Accounting for Entrepreneurs

If you need help getting your finances organized, decreasing your taxes, and getting ready for a loan, New Economy is an excellent partner. 

We’ll help you get your accounting and taxes done, and done right.

Schedule a time to meet with our Founder, Jeff, and discuss how we can add value to your situation.