How to Obtain Bank Financing

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Article Title: Written By: Michael Brassil Contact Email: articles@impactguide.com ------------------------------------------

How to Obtain Bank Financing Copyright 2005 Michael Brassil

For individuals with little or no business track record, getting a bank loan can be a daunting proposition. There is an old saying that "a bank won't lend to you unless you don't need it." All too often, it is true. Most bankers view new business start-ups with a great degree of skepticism, preferring to lend to businesses that are already well-established. There is a high risk involved in lending capital to a new conceptual business without a track record. Banks tend to be extremely careful about the loans they make. Nevertheless, it is still the best place to start. Banks should be one of the first sources that come to mind when you begin searching for business start-up funding.

The most important point to keep in mind when dealing with a bank is that bankers don't like risk. The first responsibility of a bank is to protect its depositors. As a result, bankers tend to be very cautious about lending. Bankers like to working with people they know. It is never too early to begin cultivating a relationship with your local banker. Choose a banker like you would a good doctor. You want a relationship with someone who is not only competent who will become an integral part of strategic planning.

Begin by getting to know the manager of your local bank. Seek his advice on financial matters. You are looking for personal chemistry. The more he advises you the better he will come to know you. Keep in mind that the closer you can make the relationship between you and the bank manager, the better your chances will be to be approved for a loan. If you don't have an existing relationship with a bank, discuss your interests with some of your business acquaintances. A referral from a friend is an excellent way to begin a lasting solid relationship.

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

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

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

- On the other hand, basic economies of scale sometimes make smaller loans less desirable for some of the larger banks. Big banks tend to forget that the customer comes first. You will be far more pleased with your small bank and your personalized service when it comes to getting loans and other services for you business.

- Another factor in favor of smaller banks is that they are not as likely to be encumbered by large loan committees that often seem to spend an excessively long period of time shuffling papers.

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

About the Author

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