How to Obtain
Bank Financing

For individuals with little or no business track record, gettinga bank loan can be a daunting proposition. There is an oldsaying that "a bank won't lend to you unless you don't needit." All too often, it is true. Most bankers view new businessstart-ups with a great degree of skepticism, preferring tolend to businesses that are already well-established.

There is a high risk involved in lending capital to a new conceptualbusiness without a track record. Banks tend to be extremelycareful about the loans they make. Nevertheless, it is still thebest place to start.
Banks should be one of the first sourcesthat come to mind when you begin searching for businessstart-up funding.

How to Obtain Bank Financing

The most important point to keep in mind when dealingwith a bank is that bankers don't like risk. The firstresponsibility of a bank is to protect its depositors. As aresult, bankers tend to be very cautious about lending.Bankers like to working with people they know. It is nevertoo early to begin cultivating a relationship with your localbanker. Choose a banker like you would a good doctor. Youwant a relationship with someone who is not onlycompetent who will become an integral part of strategicplanning.

How to Obtain Bank Financing

Begin by getting to know the manager of your local bank.Seek his advice on financial matters. You are looking forpersonal chemistry. The more he advises you the better hewill come to know you. Keep in mind that the closer you canmake the relationship between you and the bank manager,the better your chances will be to be approved for a loan. Ifyou don't have an existing relationship with a bank, discussyour interests with some of your business acquaintances. Areferral from a friend is an excellent way to begin a lastingsolid relationship.

The next factor to consider is whether you should approacha small independent bank or a large commercial one. Thereare several pros and cons with each option:

How to Obtain Bank Financing

- With smaller independent banks, you will tend to get morepersonal attention. You can expect friendly service, and youwill often be called by name. The tellers remember you, soyou do not need to produce identification every time youwant to cash a check

- A community bank may know you personally and havemore confidence in your ability to repay.

- On the other hand, basic economies of scale sometimesmake smaller loans less desirable for some of the largerbanks.

Big banks tend to forget that the customer comesfirst. You will be far more pleased with your small bank andyour personalized service when it comes to getting loans andother services for you business.

- Another factor in favor of smaller banks is that they are notas likely to be encumbered by large loan committees thatoften seem to spend an excessively long period of timeshuffling papers.

Follow the steps above and you will be well on your way tofunding your start-up through bank financing.

About the Author

Michael (Mike) Brassil is author of "The Only Business Start-UpGuide Your Will Ever Need." Download two chapters -- Starting a NewBusiness and The Home Working Revolution -- at:http://www.ImpactGuide.com

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