Business Bank Loan Application Tips

Event description

Most business owners meet a loan application from the wrong side. They decide they need the money, then find out what the bank wanted them to have ready. This workshop goes through it in the order a banker actually reads it, so you know what you are being asked for and why.

Sam Huston of Bangor Savings Bank starts with your own business: how old it is, where it has been and where it is going, and what it is worth once financials, inventory and equipment with real useful life left are counted. From there he covers what a lender needs to see, which is what the funds are for, how the loan gets repaid, and what the secondary source of repayment is if the first one fails. Behind that sit the three Cs of credit, cash flow, collateral and character, the last of which usually means a personal guaranty on a small business loan.

You will go through the application file itself, item by item: the business plan, financial history and projections, your personal financial statement, collateral information, and a sources and uses statement. That last one gets its own treatment, since it is where applications tend to come apart. The project and its estimated cost, what the business or the owners can put in themselves, and whether investors, grants, gifts or a home equity loan make up the rest.