How to Impress Your Banker with Your Business Loan Package


With the economy continuing to recover, many business owners are feeling more confident about their growth and are looking to expand their operations. As a result, business lending is on the rise, having increased slightly at the end of 2012 according to the U.S. Small Business Administration. But an improving economy isn’t enough to ensure that financing will be available.

Put your company’s financial condition in the best light before you meet with your banker by taking a strategic approach to your business loan package. Here are six ways to help make the right impression:

Meet with your banker
It helps to have a good relationship with a banker before you ask for a loan. Regular communication gives your banker a better understanding of your company’s strengths and weaknesses, which can help him or her recommend the best options for your business. By meeting with your banker early in the planning process — even before you start assembling your business loan package — you can receive specific advice on the information the bank might need to review your application.

Have a clear purpose for the loan
You will need to explain to your banker exactly why you want a loan and how it can help your business. For example, you may be looking for short-term financing to bridge seasonal cash flow dips from an increase in receivables and inventory. Or, you might want to buy a new building to house your growing company. Because these situations call for different lending options, you will want to share as many details as possible about your needs so your banker can help identify the best solution for your business.

Get your finances in order
Your banker will want a complete picture of your company finances. Your financial package should include at minimum: up to three years of business tax returns, your personal returns, an up-to-date balance sheet showing all assets, liabilities and owner’s equity, and a year-to-date income statement indicating how much revenue you generate and where your cash is going. CPA-prepared financial statements are highly valued. Your banker will also want to see accounts receivable and payable aging reports and learn the terms you offer your customers as well as the terms of your creditors.

Update your business plan
Revisiting your business plan provides an up-to-date picture of your business strategy, key personnel, target market and competitors. This information helps your banker understand how your business works and how a loan could help you achieve your goals. Include financial projections that show where you expect the company to be in the next few years; this can instill confidence in your ability to repay a loan.

Monitor your business credit profile
Lenders may use several credit reporting services to help decided whether to extend credit to a company, such as Dun & Bradstreet’s Business Credit Reports and FICO™ Small Business Scoring Service, as well as business credit reports from Equifax® and ExperianSM. It’s essential to review your credit profile from these services at least annually to ensure the information is accurate and to request changes if you notice any mistakes.

Make timely payments
Paying your bills on time can have a big impact on your company’s credit rating. Lenders will review your payment history, so any instances when you failed to meet a commitment should be completely explained upfront. Your goal is to have a track record that is free from blemishes. Pay bills early, rather than on the due date. For credit card bills, try to pay the full amount instead of just the monthly minimums. This shows potential lenders that you are diligent about paying your debts. Ask your suppliers to report your payment history to credit bureaus so your payment habits can help boost your company’s credit score.

City National Bank offers a range of business loans and lines of credit to help grow your business. Contact us today to learn how we can help you address short-term cash needs or establish long-term financing options for your company. Call us at (800) 773-7100, or request that a Relationship Manager contact you.