Regional and community banks are quickly becoming the primary source of loans for small-business owners. With that in mind, we asked Jonathan F. Dolphin, chief commercial lender for 21st Century Bank, for three things that impress him in a loan applicant--and three things that turn him off.
The dos:
- Come to the meeting equipped with a well-prepared financing package. Napkin notes do not impress lenders.
- Be able to explain the historical operating numbers and assumptions made in your projection. The more factually you can speak about your business, the more confidence the lender will have.
- Pay down your credit balances prior to your meeting with the bank. If you cannot handle your own personal finances, he’ll question whether you can run a company.
The don’ts:
- Don’t base profitability on increasing sales from the previous year in the current economic environment. Show profitability by predicting similar sales levels and reducing overhead if needed.
- Don’t give the banker only half of the story. Be honest. If you’re upfront with your banker, your odds of receiving the money are better.
- Don’t show up at his office with a brand new Hummer H2 and claim you need to borrow money. This just shows you don’t have a firm grip on reality.
—By Tom Nawrocki.
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