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Banks sometimes undeserved negative evaluations for small businesses. Especially in the current tightening of credit standards and loan companies must understand the bank loan, amounting to whom and when. Some banks do not receive a loan under $ 1 million. Therefore, if you want a credit line of $ 100,000, the collection of these banks will be in vain. Other banks, banks generally very small community, and not a loan of $ 1 million. Why? Banks lend capabilities. This is their typical size of loan and the maximum amount they will when everything is perfect lines.

If Bank A has a general limit of loan size of $ 3. 5 million and you need a loan for $ 3,000,000 and plans to your credit over the next 18 months for a salary increase to $ 5,000,000 for expansion of your business, you should not ask a bank for a loan. Assuming you qualify, Bank A is expected to approve the $ 3,000,000 loan, but not the increase in the direction you need for another bank in six to nine months store. Save yourself the trouble and the approach of banks with loan size limits of $ 6,000,000 General and more. Unfortunately, only a few banks explicitly the profile of their target customers or loans. The rest is just knowledge gained through research and relationship building, or simply by the correspondent bank to ask the staff (for example, an investment banker).

The banks say credit portfolio. If a drop of some clients of the bank in a given industry recently in default on their loans, the banks lending to other companies in this sector and to reduce sometimes the sister branches. adjust Moreover, if a bank with a strong weighting obtained in a particular business category, such as housing and construction companies, its portfolio of bank loans is often to restrict or prohibit all loans in this category for the remainder of exercise. Thus, with a number of Georgia banks hardest by the death or the manufacturers of financial emergency due to the drastic reduction in new home sales hit, construction companies or related business, it pays to inquire about the exposure of the Bank residential builder. Many of these banks are not able to borrow money and do not publish this information, but generally does not recognize their commitment, if challenged.

If you are a small company with less than 10 million dollars in sales a good place to start for research, ranking the state providers of loans to small businesses established by the Small Business Administration (SBA). The ranks of the top ten providers of SBA loans guaranteed by the SBA in each State into two categories: loans and total dollar volume. If you are looking for loans in dollars of low value (under $ 250,000) to continue the loan group at high volume. If you are looking for a higher dollar value of loans ($ 1 million and more), followed by the group of high-volume dollar.

If you take a bank loan and were rejected, ask yourself some questions.

· “Do we approach someone with signing authority, or have we encountered a low-level employee who has to fight for every dollar over $ 25,000 or $ 50,000, he asks?

· “Do we have to dress professionally and with confidence the project has or will appear, we show in short pants and all questions asked of us by surprise?

• Have “we discuss our plans to develop a long term relationship with a bank, we can build or develop, we have to say, we were in the mall for the best price?

• Have “we have a package of credit – a summary and our financial statements – or if we record information on a post-it?”

If your answer is the first option for each question and then research the types of banks may get to Yes, and what may be other sources of capital. If you answered yes to the second option for each question you on your packaging and preparation before starting another bank or another source of funding approach. If you’re not ready, you can not provide a minimum financial statement or other financial information, and you can not adequately describe your business and market development in words, then you’ll probably still down by banks and outside many other sources of funding.

A bank does not see a business plan. Instead, they want a very condensed, very relevant to the business plan called Synopsis Summary to see. It is long, typically four fifty-seven pages and includes the following:

1) General review of the operation;

2) Overview of the industry;

3) Overview of the market, including a competitive advantage;

4) the management team, including the Advisory Committee;

5) plan for company growth;

6) must be funded and why;

7) A diagram of the sources and uses of funds.

Each section should be about 1-2 points each. In summary must be the historical financial data for the last three years are reviewed and revised. If finances are not audited or reviewed by a CPA – and the overwhelming majority of the Small Business Financials not – then copies of tax returns for the business three years ago.

One last point: Create and maintain a relationship with your banker. A real banker is someone who has the power of decision … Usually a person of high authority of $ 500,000 or signature. Cultivating a relationship with a good banker worth. The fact that bankers support you if your lower margins (if notified), no other sources of funding, if he or she can not help directly, and seek creative solutions if your loan does not exceed the limits of the bank.

All rights reserved. © excerpt from the solution of the financial equation: Financing Solutions for Small Business

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