Putting credit to work can create all sorts of opportunities for your business, but applying for a loan can be time-consuming and even stressful.
If a loan request is denied, it’s most often because of a failure to present a clear business strategy or disregard for the application process. These hurdles can be easily overcome.
Think like a banker when making your case for credit. It’s good to be familiar with the basics, like collateral, profitability, cash flow, and a strong balance sheet, but your business narrative may be just as important.
Follow these guidelines when asking for the credit you need to expand your business.
Consult your advisors. Speak with your financial advisors to find out how you can strengthen your loan application and increase your chances of approval. An accountant, banker, or counselor from your local Small Business Development Center may be able to help you with a strategy and detailed financing plan.
Create a compelling business story. An engaging and thorough narrative will provide your banker with insight on how your company operates. Be sure to talk about your background, education, business expertise, and industry knowledge. How has your management style contributed to the company’s success? Emphasize your commitment to the business and its long-term goals.
Bring your story to life with a solid business plan. Discuss where your business is going and how you plan to get there. How will additional financing increase your company’s profits and value? Outline how newly generated cash flow will cover loan repayments.
Prepare professional financial statements. Prove your company can control operating costs and turn a profit. Work with your financial advisors to develop balance sheets, income statements, and cash flow reports to prove your business has a promising net worth and healthy liquidity. Be ready to provide statements for both personal and business finances.
Provide an accurate and complete application. Some of the application requirements and documentation needed for credit approval might surprise you. Your Truist relationship manager can help you figure out what you’ll need for your loan application and connect you with a team of experts to make sure it’s done right. Truist even has a dedicated Small Business Administration (SBA) team that specializes in assisting businesses as they complete, submit, and manage SBA applications.
Understand your available collateral. Most loan agreements will require you secure the loan collateral. But what exactly is collateral? Collateral is any asset that can be used as a source of repayment to protect the lender’s investment in the event of default. What can your company offer as collateral? Equipment? Vehicles? Property? Keep in mind that liquid assets like cash, investments, and personal real estate can also serve as collateral.
Commit. Prove that you’re fully committed to your business and heavily invested in its future. Include your private financial records, relevant business experience, and personal equity investments in the company to help strengthen your loan application and impress your banker.
Develop a working relationship. Developing a relationship with your banker might take time, so start building one well before you need credit. Be sure to share any news about your business’s development with your banker. Ask your banker for advice on a wide variety of financial issues. The better your banker understands your business, the more value Truist will be able to provide to make your business a success.