Before you walk in the door of your lending institution of choice, you need to do an assessment of how you plan to “sell” yourself and your SDVOSB to get that loan.

The bank will want to clearly understand the nature of your business. Have a clearly defined written purpose statement before you walk in that door.  You don’t necessarily have to show it, but the fact that you spent the time coming up with one will make you more confident of presenting what it is you do, and how to make the lender clearly understand your business.

In that purpose statement, focus on the expertise you have in your particular marketplace and why customers come to you and not to your competitors.

What “edge” do you have that will make them have the comfort level to give you a loan.  Your edge could be your ability to produce something cheaper, or the best service in your marketplace, a product that is better than your competitor or a product that no one else has; but you need to be able to make the lender understand that you have an edge that the others don’t.

Lenders want to know how invested you are in your business. Your lender will want to see that you are putting money back into the business.   By showing that you have invested (and re-invested) into your business you are saying you have a clear commitment to make it work; you are “putting your money where your mouth is”, and that you have confidence that it will succeed.

Are you a one person operation or do you have partners or employees? The lender wants to know that anyone involved in the day to day operations is also invested in making the business grow and what expertise/experience makes them an asset.

Be prepared to show your collateral (security for the loan). This includes things like real estate, equipment owned, securities you have, and if you don’t have strong collateral, a possible co-signer.

Be prepared to show a financial statement.  Lenders want to see the historical perspective of your business to make sure that they are investing in a business that has a reasonable chance of paying them back on their loan.  If your business is on shaky ground, try to show them what steps you are taking to change this situation; have it in writing.

I am not trying to insult your intelligence but it doesn’t hurt to remind you that going into the bank/lending institution needs to be like going to a job interview. You need to be dressed in business appropriate attire, with your hair, shoes, and clothing clean and neat.  If you normally wear a hardhat and jeans, change into a suit or other suitable attire for the meeting.  Bankers have to not only look at the numbers & the plan but they are also looking at you and whether or not you are going to be an acceptable risk.

To summarize, be prepared to ask for a loan by confidently knowing the nature of your business and being able to explain it, showing that you are personally committed to your business, as are any co-workers, showing that you have something of value for collateral, documentation including a financial statement of your business, and dressing to demonstrate that you are serious about your business.

Sonja @ PrepFire