Q: What can I do to improve my chances of getting a business loan?

A: The best way to improve your chances of getting a yes answer from your banker is to be prepared before going to the bank. The bank requires a business owner to show repayment ability, have acceptable collateral to back up the loan, have good business and personal credit, have a reasonable owner investment in the project and be able to show the business idea has merit. The best way to ensure all the necessary information is available is a well-researched, well-written business plan.

Writing a business plan will take some time, usually between 50 and 200 hours. It will require thorough research to answer all the questions a lender might have about the market potential. Make your plan as specific as possible. For instance, if you include information about the local customer base, document where you found that information. Your plan will require well thought out and documented financial projections. Explain why you believe the projected revenue and expenses are probable. The plan does not need to be long but if it doesn’t answer all the bankers questions, a business loan might be denied.

Business planning tools are available from several sources. The Small Business Development Centers in Oregon have business planning classes, sample business plans, LivePlan an online planning template, and many other tools. The Oregon Small Business Development Center Network has a Capital Access Team. This team consists of regional advisors well versed in helping businesses find access to funding. Find them at http://bit.ly/SIxFiE.

The Small Business Administration, www.sba.gov, has several sample business plans on their website as well as links to other resources. Once your plan is written, ask an advisor at the Small Business Development Center to review it and point out any areas that could be red flags to a banker so you can change those before your meeting with a lender.

When you meet with your lender, you’ll want to take all the information they will need to process your loan request. Information to include with a business plan: the bank loan application, three years of tax returns for the business and any owners who have more than a 19 percent ownership interest in the business, three years of financial statements for the business including balance sheets and profit and loss statements, a current year to date balance sheet and profit and loss statement, personal financial statements for all owners with more than a 19 percent ownership interest, a list of assets and equipment to be used as collateral, and legal documents pertaining to the business, such as leases.

Get to know the commercial lender at your bank prior to asking for a loan. Learn what types of loans and what types of businesses your lender is familiar and comfortable with. Keep your banker informed about what’s happening in your business. Invite them to an open house if you have one. Preparation can make the difference between a yes answer and hearing no from your banker. If your business banker is not able to make the loan, contact the Small Business Development Center about other options that might be available for business financial assistance.