Secure Funding: How to Prepare for Your Meeting With a Small Business Lender / Funding / Last Modified: February 22, 2017

Nervous about meeting with your small business lender? Use this checklist to make sure you're prepared and can secure much needed funding.

Running a small business doesn’t come cheap.

Even if you’ve scrimped and saved to bootstrap the operation on your own, or were fortunate enough to get an investment from friends or family, there may come a time when you need a loan to continue operating your business.

Whether it’s working capital to fulfill a large order, a small loan to purchase new equipment, or a large loan to expand to a new location, chances are that at least once in the life of your business you’ll need to approach a bank for a loan.

It can be nerve-wracking to apply for loans, so use this checklist to make sure you’ve got all your ducks in a row.

Related Article:Why Collateral Matters When Getting a Small Business Loan

Step One: Gather Business Documentation

You’ll need information about your business, including:

  • Business name, and any documentation supporting it, such as a Doing Business As (DBA)
  • Proof of your business address: P.O. and UPS store boxes don’t count
  • Business contact information: phone number, fax number, email address
  • Company status and history: when the company launched, the type of company, names of owners
  • Employer identification number(s) (EIN): If you don’t have one of these, you can get one from the IRS. Some states may also require you get one for the state level. You can also use your social security number as a substitute.

Step Two: Gather Current Financial Records

In addition to the business basics, you’ll want current financial records on hand, so you can prove the ability to repay the loan. These include:

  • Gross sales or annual revenue: if you don’t have a full year’s worth of data because your business is new, bring what you have.
  • Business bank information: account number and statements to show balance information. You may be required to have a certain amount of working capital available before you can even qualify. If it’s an issue, there are a few ways you can increase your working capital quickly.
  • Company tax returns: if you don’t have copies of these readily available, request them from your accountant or the IRS.
  • A cash flow analysis completed within the last 90 days that includes any and all accounts payable and debt payments.
  • Bonus: To really wow your loan officer, have documentation ready to support what you’re going to use the money for. For example, various quotes for new equipment, wholesale orders from new retailers you’re trying to work with, or offers you’ve placed on a new building to move or expand to. This will show them you’re working with a long-term plan in mind, and you’re not just asking for an arbitrary dollar amount.

Related Article: Will Work for Funding: 7 Ways to Finance Your First Small Business

Step Three: Gather Personal Information

More than the business activity, lenders want to know about the people behind it. You’ll need to provide:

  • Personal financial statements for any owners who own more than 20 percent of the business
  • Three years worth of personal tax returns for any owners who own more than 20 percent of the business
  • Personal bank account information including statements and current balance information
  • Annual household income
  • Date of birth
  • Country of citizenship if you’re not a U.S. citizen
  • Social security number
  • Your name and contact information, such as your home address, phone number(s) and
    email address
  • An IRS verification form (4056-T) for each owner

Step Four: Prepare a List of Questions for the Loan Officer

Business lending is complex, and while it is similar to personal lending in a lot of ways, it’s not the same thing. As such, you’ll likely have a lot of things you want to know more about.

To keep the meeting on pace, and to keep yourself on track, it’s a good idea to prepare a list of questions for the loan officer before the meeting. You don’t have to go in and read straight off the list, but use it to remind yourself of issues you want to address during the meeting. Some example questions could include:

  • Are there fees involved with applying for the loan?
  • What are the specifics of the loan? It helps to comparison shop to make sure you’re getting the best possible terms.
  • How likely am I to be approved? The loan officer may be able to provide information such as minimum credit score and cash flow to help you determine if the loan is worth applying for.
  • Who has to be on the application? Generally speaking, anyone with a 20 percent or higher stake in the business must be on the application, regardless of their personal credit standing. If a single owner has poor credit, it could negatively affect the chances of approval.
  • Is my personal credit report a factor? Yes, in most cases lenders look at your personal credit report. If it’s not in the best shape, take steps to improve it prior to applying for the loan.

Related Article:How to Get a Business Loan With Bad Credit [INFOGRAPHIC]

Step Five: Dress Professionally

Though it’s not always necessary to meet in person with lenders, if you’ve scheduled a face-to-face meeting with your loan officer, make sure you’re presented nicely. Dress appropriately. In dress slacks and a polo or blouse.

Make sure your hair isn’t a mess, and your nails are trimmed or otherwise well-kept. Keep perfume/cologne to a minimum, and avoid any distracting jewelry. Think of it like a job interview.

Remember, each lender will have their own loan products, and requirements for approval may vary. If the conventional bank approach isn’t going to work because of credit, you may need to turn to alternative lending solutions. Both the conventional and alternative lending routes will require a certain amount of documentation and professionalism to land the cash.

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