Getting your small business loan

What to prepare, what to ask for

Work through nyour scenarios, best case, most likely and worse case. Everyone loves this exercise… at least the first part. Best case scenario, “If everything goes just like I hope and my plans all go right, I’ll …”, you know the game. We all do it, that is what keeps us going. Now let’s finish the exercise. The most likely case scenario is not as much fun because we have to look into our gut to see what will really happen. This is where wishes meat reality. Which things go wrong and how far off were we from our targets.What's actually going on in the marketplace. Assuming this more realistic outcome, how did we fare?

Finally, let’s assume the absolute worst of all possible yet realistic outcomes. How did we do? Do we even survive? This last one is very important because this is where your banker starts their analysis. Bankers have lived through the last 4 years of their worst case scenarios and found that most worst case scenarios were foolishly optimistic. Do your homework and market research because this is where lenders confidence in their borrower comes in. If lenders think you can navigate in troubled waters, they will feel more comfortable joining you. I tell all my bankers that I stay up at night worrying so they don’t have to.


Don’t overreach, you might draw back a nub. Be positive about your project. Happiness is contagious and it will often yield more positive results. Don’t, however, be foolish enough to ask for too much. As little as 6 years ago, borrowers and bankers alike would “jokingly?” hint that you should ask for as much as you wanted because leverage was good since it was someone else’s money. “What the heck? Right?”


Picture the morning after a big party with an industry wide huge hangover that won’t go away. The mere mention of the party poison from will send you back for more “recovery”. It’s the same thing for the bankers except their poison was loose lending. This 6 year easy money hangover just isn't going away. Make sure your request is well itemized and can be documented. Get what you need but no padding. A contingency reserve is favorable but it is just for that- contingencies not operating expenses. You never know what can/could go wrong, but the better you layout your initial plan, the better are your chances for identifying pitfalls and shortcomings.


Again, show that you have done your homework. The more confidence the banker has in you and your plan, the less digging and independent thinking they will do. There is nothing wrong with bankers thinking independently and I actually prefer them to do some because it keeps me on my toes. But left on their own, bankers often revert back to fear of the poison and the “consequences” that follow. It’s your future, it’s your business, it’s your livelihood, take control if you want to be successful in obtaining financing. Get prepared & good luck.



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