- Finish your business plan. You need a plan for, at least, two obvious reasons:
- to help you estimate how much money you need;
- and to communicate with your banker.
- Call your bank. You probably already have a business banker or relationship manager, you have security, and the plan. Talk to your banker. Ask about terms, conditions, and requirements. Aside from your business plan, you’ll probably need a personal financial statement.
- Visit other high street banks-it pays to shop around. Ask about terms, conditions, and requirements.
- Think it over.
- Consider the risks. Understand that assets pledged as security can be lost. Are you betting your house? Are you betting your company, or your livelihood? Don’t make bets you can’t afford to lose.
- Consider your banking relationship. This is particularly important for an ongoing business, more so that for start-ups. Most experts would agree that a strong relationship with an interested bank is an important part of your business. Think about the long term health of your business. Is it time to switch banks? Is your bank competitive? What’s better for your company on the long term.
- Expect to sign personal guarantees. If you haven’t been in business for years, don’t have major assets from inside the business to pledge, or you are a closely-held private company, expect to sign personal guarantees as part of the loan process. That’s not an iron-clad rule, and maybe you can negotiate away from it; but it is the norm.
- Make your decisions and implement. Fill out the paperwork and apply for the loan, or revise your plan and look for other financing alternatives.
