Getting a Loan
By Brad Benesh
Senior Vice President, Business Banking
While it would be great to never have to borrow any money, chances are your business will need a loan at some point, whether to develop an e-commerce website, purchase inventory, or build a new facility. Whatever the reason, North American Banking Company can help.
- Commercial real estate loans
- Equipment loans
- Small Business Administration loans
- Operating lines of credit
- Letters of credit
- And more
Our business bankers, me included, are well-versed in all aspects of commercial lending and will help you through every step of the process—from reviewing loan programs and eligibility requirements to preparing your loan application, from deciding how much you can afford to borrow to determining the most tax-advantageous way to do so. And while we can’t do your financial projections for you, we will offer helpful input every step of the way.
Here are some tips to help you get the right type of loan and the best loan structure:
- Find a community bank. When your business success hinges on a loan or financing package, you want a banker with direct access to the decision-makers, which is why you should consider North American Banking Company. We’re locally owned and operated, so all decision-making takes place right here, which gives you two important advantages: faster response times and greater flexibility.
Plus, we’re savvy when it comes to Small Business Administration (SBA) loans: In 2016, we were recognized by the SBA of Minnesota as the Third-Party Lender of the Year for providing the best overall support of SBA’s 504 loan program, both in number of loans and loan dollar value.
- Spruce up your business plan. If you’re applying for a business loan, you’re going to need to submit your business plan. It doesn’t have to be lengthy or fancy, but it should clearly describe your business concept, target market, and goals, as well as your plan for achieving those goals. Your business plan should also include a resume for each owner. For help improving your business plan, check out these business planning resources from the SBA.
- Check your credit report. The bank will be looking at your personal and business credit histories, so be sure to review your credit report before you apply. You can get a free copy from annualcreditreport.com. If you see any issues or errors, work to address them right away.
- Prepare a realistic loan request. How much money do you need to borrow? How exactly do you plan to use it? When will you pay it back? Provide as much supporting documentation as you can; the more thorough the documentation you’re able to provide, the more confident your banker will feel.
- Establish your collateral. Be prepared to provide collateral and a personal guaranty to pledge against the loan. Acceptable collateral generally consists of business assets such as equipment, buildings, accounts receivable, and, in some cases, personal assets, including home equity.
- Practice your pitch. Before you meet with a banker, know your business plan backwards and forwards. Develop a three-minute “elevator pitch” and practice answering the questions you think you’ll be asked.
And don’t feel you have to have all your ducks in a row before talking to a banker. Instead, pick up the phone or come on in. I’m always available to talk to you, even if you’re just considering going into business. That way, I can provide feedback on your idea and offer advice and guidance early on, saving you time and perhaps even some frustration.
When meeting with your banker, it can be helpful to share:
- Your business plan, if you have one. If you don’t, we have compiled a list of resources to help.
- Resumes or bios of all owners
- Three years of tax returns for all owners (and the business, if it’s already in existence)
- Legal documents, including articles of incorporation, business agreements, etc.
- Business registration and any licenses
Applying for a business loan can be easier than you think. And, finding the right banker can make all the difference. At North American Banking Company, we look forward to getting to know you, your business, and your goals.
Business Banking Senior Vice President Brad Benesh helps meet the financial needs of dozens of businesses each year. A graduate of the University of St. Thomas, Brad and his wife Deb live in Lake Elmo, where they enjoy family movie nights and spending time with their granddaughter.