Survey Says Small-Business Lending Is Surging – so what?

Robb Mandelbaum blogged for the N.Y. Times that a recent survey by Greenwich Associates shows that lending by banks to small businesses is picking up. Read the blog here. (The N.Y. Times You’re the Boss blogs are my favorite!)

While this is undoubtedly good news, so what? Does that mean that any business that applies for a loan has a better chance of getting approved? While this may be true, I think that any business’s chances of getting a loan are much more dependent on the quality of their preparation, the comprehensiveness of their application package and the way in which the bank is approached.

The loan package should be prepared with complete financial statements and supporting schedules. Did I mention that the financial statements should be up-to-date, be prepared in accordance with GAAP and structured to reflect the real economics of the business? Rather than just submitting financial statements and tax returns, a complete package will contain information that the banker will not ask for, but will appreciate and make it easier to get approval. I love it when a banker gets a package that I’ve prepared for my client and says, “Wow, that’s the best package I’ve ever seen!”

In most cases, multiple banks should be approached, with your current bank being the last. One of my clients was recently approved for a $500,000 loan after we talked to eight banks in New Jersey. Their current bank yawned with disinterest. Now they will be losing a customer who is growing fast and profitably!

Getting money from a bank is actually a sales process! Having founded a community bank and sat on their Board of Directors for years, I have come to know how bankers think and the extremely restrictive regulatory environment in which they work. Sometimes their decisions don’t seem to make common sense or business sense, but when viewed from where they sit, they make perfect sense!

So, while it’s great to hear the good survey news about business lending surging, how well you do with a bank will depend on how well you do for the bank!

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