1. Don’t confuse the business plan with the loan application. While elements of the business plan are a part of the loan application, they are separate documents. The SBA web site has an excellent online course in how to prepare a good loan application, and here’s the registration link.
2. Recognize that your cash flow forecast will determine the loan amount you seek. While you will want some leeway, the bank will make sure the two match. You can’t ask for an amount that doesn’t reconcile with the cash flow forecast. This puts even greater emphasis on the accuracy and completeness of those forecasts.
3. Request a loan term that matches the loan’s purpose. For example, if the proceeds are for a piece of machinery that will last four years, request a term longer than four years to pay it back. If your request is for inventory and receivable financing, request a line of credit that can be used and paid back on a regular basis. Remember, you can mix the kinds of loans you need.
4. Highlight your experience in the loan application. Lenders take great solace in the knowledge that their borrower knows the in and outs of the business. There is no substitute. Mention your experience throughout the application.
5. Get a complete personal credit report to check it for errors before you apply. A poor credit report can kill a good application. If there are fixable problems, correct them now! Don’t be surprised.
