Four Tips to Increase Your Firm’s Chance of Getting a Small Business Bank Loan
Boutte, LA — Banks have the funds and want to make loans to small business owners who have the ability to survive and thrive in our challenging economy. “Small business loans are the key to keep communities growing and people working,” said Brandt Dufrene, President and CEO at First National Bank USA.
First National Bank USA wants to lend to small businesses and recommends owners prepare well before applying. Before you do, small business owners should review the following checklist:
- Have you developed and maintained an ongoing business relationship with your banker? Relationships count in the banking world. To effectively serve customers, bankers need to understand their goals, anticipated financial needs and current financial situation. This level of understanding can only come from a continuous dialogue between the banker and the customer.
Many times, the advice a banker gives is far more important than the product or service they offer. Your banker’s advice can be more targeted and focused on your business’s needs if they know your current financial situation and plans for the future.
- Does your business need a loan — or an equity infusion? It’s important to understand the difference between loans and equity. Loans need to be repaid over a defined time period. Equity investments are permanent funds that serve as “shock absorbers” so businesses can weather both good times and bad.
Banks are in business to make loans. Equity funds should come from the business owners.
- Can you clearly explain your firm’s “value proposition?” You should be able to explain why customers should do business with you and how you’ll compete effectively in your chosen target market segments.
- Have you developed at least two ways to repay the loan? Bankers look for both a primary and secondary source of loan repayment. Primary sources of repayment relate to how much cash your business or investment is capable of generating. Secondary repayment sources
could include pledging business or personal collateral, or a loan guarantee by the firm’s
owners, suppliers or customers.
The more certainty that the banker has that the loan will be paid “as agreed,” the more likely that you will not only receive a favorable loan decision, but also the best interest rate.
First National Bank USA offers a number of small business loan products to fit many borrowers’ needs.
About First National Bank USA
First National Bank USA is locally owned and operated since 1975 with offices in Boutte and LaPlace. We are your hometown bank offering free checking and a full range of banking services to meet all of your financial needs.