For many Maryland small businesses, securing a business line of credit is a considerable milestone. Â As a business matures, however, it may become clear that the initial business credit line isn’t able to keep up with the growing need for financing. Here are a few ways Maryland small business’s can increase their line of credit.
Increase Your Line of Credit with Additional Collateral
The easiest way to get a credit limit increase on a business line of credit is to offer up additional collateral.
Additional collateral for the purpose of business financing may include: real estate,Â equipment, inventory or assignment of account receivables.Â The amount of collateral you will be required to offer can vary greatly based on the size of the line of credit, the health of your business, and your borrowing history with the bank.
Often, especially if you haven’t been in business for very long,Â or your borrowing history with the bank is short, you may need to put up 120% of the line of credit in collateral. ThisÂ covers the maximum amount for the loan, as well as any fees and interest that are incurred in the case of non-payment.
Strong Financial Statements Mean Safe Investments
If your small business is experiencing growth and consistently exceeds projections, and you have the financial statements to go along with it, most banks will consider allowing you to increase your business line of credit limit.
As with consumer loans, provingÂ an ability to repay larger loans is often enough to assure banks that increasing your credit limit is a safe investment.
Responsible Borrowing History
Similarly to the previous point, when requesting a credit line increase, displaying a strong history of responsible borrowing will help increase your chances.
Building a responsible borrowing history often takes time, paying off any balance on your business line of credit in aÂ prompt and regular manner helps prove creditworthiness.
This is a good method for smaller but steadyÂ increases to the business line of credit, and is an absolutely essential prerequisite for any increases in credit limit.
Business Owner Guarantor
In extreme scenarios a business owner can come on as a guarantorâ€”essentially nominating himself as next in lineÂ to repay the loan in the event that the business is unable to. This involves a high degree of risk, as it eliminates many of theÂ protections offered by structuring your company as a corporation.
A personal guarantee can help increase the limit on a business line ofÂ credit, but only if the business owner has impeccable credit and a solid financial footing. In the event the business defaultsÂ on the line of credit, the personal guarantor will be responsible for all remaining debt.
Often, the critical ingredient for getting a higher limit approved is timing. Since borrowing against a credit lineÂ is Â flexible and can be done on an as-needed basis, businesses should carefully consider when to apply for anÂ increase.
The ideal time is when a business does not actively need to borrow money. Having recent positive news, suchÂ as opening of a new location or a launch of a successful new service or product line, can go a long way towards gettingÂ the limit increased on a business line of credit. The worst possible time to apply for an increase is when your business isÂ actually strapped for cash or desperately needs a loan.
One of the least understood but most powerful small business financing tools is the standby letter of credit. While itâ€™s used fairly extensively by larger companies, many small business owners frequently wonder what a standby letter of credit is, and arenâ€™t aware of how it can help them and their enterprise succeed.
What is a Standby Letter of Credit?
A standby letter of credit, or SLOC, is at itâ€™s core a loan of last resort and a type of warranty for financial contracts. It is issued by your business bank at the beginning of a contract, and acts as a guarantee that if you fail to fulfill your obligations by the end of the contract term, the bank will make payment on your behalf.
Unlike most types of financing, the standby letter of credit is never meant to be used, instead functioning as a backstop to prevent contracts from going unfulfilled in the event that your company closes down, declares bankruptcy, or is otherwise unable to pay for goods or services provided.
Performance SLOCâ€™s and Financial SLOCâ€™s
Standby letters of credit come in two primary forms: the performance standby letter of credit and the financial standby letter of credit. The performance standby letter of credit works to ensure that work you have agreed to perform is performed in a timely and satisfactory manner.
For example, if you own an architectural firm and are contracted to build a museum, you may be asked to provide a performance SLOC that guarantees that you will finish the plans by the end of your contract term, and that the structure you design is sound and meets all requirements. If, for some reason, you are unable to finish, or your design is deemed unsafe or unbuildable, the SLOC will take effect and pay the museum a preset amount.
A financial letter of credit generally works on the other party in the exchangeâ€”in our example, the museum can be asked to provide a financial SLOC to your firm for the total amount of the project. If they fail to pay you after work is finished, the bank will issue payment to your business on behalf of your client.
These types of SLOCs are often required when performing international trade or other large purchase contracts where other forms of payment protections (such as litigation in the event of non-payment) can be difficult to obtain.
How to Obtain a Standby Letter of Credit
Obtaining a standby letter of credit is similar to obtaining a commercial loan, though with a few key differences. As with any business loan, you will need to provide proof of your creditworthiness to the bank.
Unlike a loan, the process for approval for a SLOC is much quicker, with letters often being issued within a week of all paperwork being submitted. Also unlike traditional loans, the bank will require a fee of between one and ten percent of the SLOC amount before issuing the letter. This fee is usually charged per year that the letter of credit is in effect. If the terms of the contract are fulfilled early, you can cancel the SLOC and not incur additional charges.
For small business owners, the standby letter of credit can be a powerful tool for establishing trust with suppliers and vendors. Obtaining an SLOC is proof that you and your company have good credit, and can put many suppliers at ease about providing you favorable financing terms. Furnishing a financial SLOC can often allow you to negotiate payment and financing terms with suppliers from a position of strength in order to get the best interest rates and payment schedule, while maintaining a good relationship with your suppliers.
If you provide services, on the other hand, offering to furnish performance standby letters of credit can be extremely useful to helping your business secure large contracts. Putting your clients at ease by being willing to guarantee your work financially can overcome many of the objections business owners face in the selling process.
Getting a commercial mortgage loan in Maryland can seem daunting, especially for small business owners who are just setting foot in the commercial real estate market for the first time. One of the biggest causes for stress is simply the fact that for many people, a commercial mortgage is the single largest loan they will ever take out in their lives. More than that, however, the process of obtaining a commercial real estate loan can be convoluted, long, and very involved.
Local Banks v. National Banks
One way to make the process much easier is to get your loan from local banks v. national banks or regional chains. There are many advantages for choosing to pursue a commercial mortgage loan from a Maryland community bank instead of a larger bank. All of them can make the process significantly easier to navigate, and end up saving you time and money.
Better Access to Decision Makers
When you apply for a commercial real estate loan from a large bank, the person you will be dealing with on a daily basis is rarely the same as the person who ends up approving or denying your loan.
In fact, it’s highly unlikely that the person you interact with ever talks to, or even knows, the final decision makers. With a local bank, your lending representative might not be the final decision maker either, but they are certainly much closer to the top of the decision pyramid.
Because community banks are smaller than large chains, the lending process tends to be more inclusive, and your lending representative will have plenty of opportunities to bend the ear of the final decision makers to support your loan.
Understanding of Maryland Commercial Mortgage Loans
Lending managers at larger banks base much of their decisions and processes on the directives that get passed down from the top. This formulaic approach to issuing commercial mortgage loans give them less of an insight into what is actually happening in their back yards. They also tend to move from branch to branch far more often, and aren’t as plugged in to the local market the way that community banks in Maryland are.
A lending manager at a local community bank, on the other hand, will usually be much more plugged in to the real estate market in your area. With the experience that comes with doing mainly small business commercial mortgages, your community bank lending manager will be able to advise you on what similar deals have passed through their office have closed for, what kind of prices other buildings are going for, and whether now is really a good time to buy or not.
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These kinds of insights are only possible when lending managers spend the majority of their time talking to small business owners and focusing on small business commercial mortgages.
More Investment In Your Success
Large banks rely on high churn to constantly keep profits high. That is, they are far more interested in doing a large number of deals with a large number of customers than they are in helping their customers get larger and larger deals. Community banks often don’t have the luxury of a customer pool numbering in the millions. Instead, the focus of your lending manager is customer retention and growth.
Rather than seeing you as just another number in the line of mortgages they will issue, your business is central to the bank’s financial success, and your growth is essential to future success. To that end, your lending representative is more likely to go out of their way to help you succeed, in the hopes that when it comes time for you to expand to a larger building or a new location, you will come back to give them your business. The better they can make your financial situation, the sooner you can be their customer again.
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Finding business equipment financing, or business funding for any expansion, can be a difficult and time consuming process. One of the best pieces of advice anyone can offer a small business owner regarding the process is: start early, and put in the hours. Many entrepreneurs, though, don’t realize exactly what’s meant by putting in the hours. The process of getting business equipment financing can be so convoluted and involved that many business owners just don’t know where to start. To help ease the stress and simplify the process, we’ve put together a step-by-step guide on financing an equipment purchase for your small business.
Include Business Equipment in Updated Business Plan
Before you even consider approaching any banks or speaking with any lenders about a business equipment loan, you need to have all your pre-work finished. What do we mean by pre-work? At the absolute minimum, you should have financial statements prepared and checked, going back as far as you can. You should also have an up-to-date business plan. Don’t think that you can simply reuse the business plan that you drew up when starting the companyâ€”unless you just started your small business a month ago, chances are that something has changed since then, and these changes need to be accounted for.
Make sure that the equipment you plan on purchasing is listed in the updated business plan, and that you have very clearly and explicitly accounted for what specific equipment you want to purchase, where you want to purchase it from, how you plan to pay for it, and what kind of impact the new equipment will have on your business. That last part is going to be very important, and you will need to make a clear and fact-supported case for how the equipment will help you grow your business. Make sure to justify the expense, and build a strong case for getting new business out of the investment.
Applying for Business Equipment Financing
Remember, business equipment financing should be a mutually beneficial relationship between you and your bank. Make a list of multiple banks that you would like to approach, and set up a meeting to talk to their small business lending representative or bank manager. Be sure to inquire about their equipment financing terms before moving much further.Â If their financing agreement is not something you are willing to take part in; you can quickly disqualify this bank.
Treat it like you would an interview with any potential partner: find out what they would like out of the deal, ask if they have any experience financing equipment or companies like yours, and get a feel for how the loan application process is set up.
Once you are comfortable with the banks you’ve spoken to, it’s time to start applying for financing. To make the process easier, take all of the documents you’ve compiled and make copies of all of them, and put them in a folder labeled with the name of the bank it’s going to. Make sure you include your financial information, business plan, and all identifying business documents (articles of incorporation, business licenses, etc.) You’ll also want to make sure you have your own ID handy.
Initially, if you have all of your documents in order, the bank will review them and let you know about next steps. It’s quite likely that they will contact you with additional questions, or request other documents. Sometimes, they might do both when you first come in to apply. Don’t be dismayed, and instead take note of the questions you are being asked, and the additional documents. Get copies of the documents prepared to have ready in case the other banks you approach also request them, and look for feedback on your answers so you can know how best to phrase them the next time they come up.
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Getting An Answer
Once all the questions have been answered and the bank has all the documents they need, all you can do is wait. How long it takes depends on the bank and how quickly you responded to requests for additional documents. It can take days, or a week, or in some cases a month if there is a lot of back and forth and further requests. This is why small businesses should do everything in their power to anticipate financing needs well in advanceâ€”it’s better to be approved for a loan too early than to miss an opportunity because of a long approval process.
If your equipment financing is approved, congratulations!
If not, don’t be discouraged. We have heard stories of small business owners approaching 20 or more banks before finding one that will approve them. Take the answer well, and see if you can get clarification from the bank manager or small business lending representative about why your equipment financing request was denied.Â The most common reasons for denial are bad credit, not enough monetary value in collateral, under-capitalization, issues with cash flow, and outside conditions.
If you handle the rejection with professionalism, many lenders will be very candid and up front, often even going so far as to offer advice on how to get your financing approved elsewhere. Take this advice, and use it to make your next loan application even better.
Equipment purchases are a vital part of starting a small business in Maryland, especially for manufacturing and retail companies. They can also be necessary investments once your business is up and running. Equipment updates and modernizing old equipment can make your business more productive, efficient, and even save you money in the long haul.
Equipment, however, is a significant investment and very few small businesses have the cash on hand needed to outright purchase large scale equipment. With costs that can easily run into the hundreds of thousands of dollars, finding a way to finance equipment purchases is something that many small business owners have to look into to grow their company. While there are many ways to finance business costs, many business owners turn to something called an equipment term loan for acquiring or updating new machinery and equipment.
What Is an Equipment Term Loan?
An equipment term loan is essentially a business loan that offers either a fixed or floating interest for a pre-specified term (seven years on average). If the loan is longer than a few years, a fixed interest rate is what generally draws business owners to an equipment term loan, since the stability of having a locked-in interest rate is often times a safer bet than financing with a floating interest rate loan or a credit card. Those types of financing could have an unexpected increase in the APR, potentially adding thousands of dollars in additional interest.
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Getting Started with Equipment Term Loans – Things to Consider
- You might need additional collateral for your loan. Depending on the amount of money you’ll need to finance, standard collateral for a personal loan (like a vehicle) might not be sufficient enough for an equipment term loan. Be prepared to find other types of collateral that will be accepted by your bank. Real estate is the most common type of collateral for a long-term business loan, given that it’s one of the most common types of assets that are available to business owners. Other types of collateral that are commonly accepted for equipment term loans are natural reserves, inventory, plants, and machinery.
- Though the average term loan for business equipment is around seven years, some term loans can extend as long as twenty years. This largely depends on the cost of the equipment being purchased, as financing for a larger sum of money generally takes a longer term to pay off. Depending on your company’s financial situation, and how much money you can afford to pay back each month, you can work with your bank to find a term that works well for you. Longer terms will rack up more interest, resulting in a larger overall payment, but will have smaller and more manageable monthly or quarterly payments. Shorter term loans will keep your overall repayment costs lower, but you’ll have to take on larger monthly or quarterly payments.
- It could take two to three months to get approved. The process for securing an equipment term loan isn’t an altogether quick and easy process. Keep in mind that in best case scenarios, a few weeks is needed to process an equipment term loan. In a worst case scenario, it could take anywhere from a month to 2-3 months to review your company’s financial statements and finalize the paperwork before any money makes its way into your account.
- You’ll need to prove your credit worthiness. Business term loans, especially ones for high ticket purchases like manufacturing equipment, have a very thorough loan approval process. Be prepared to not only have your personal and business credit reviewed, but also your company’s financial statements, including cash flow, revenue projections, and possibly even your personal financial statements. The bank will want to make sure that you’re in a good financial position to be able to take on monthly or quarterly equipment term payments for the duration of your loan term.
Whether you’re looking to acquire vehicles for your company or balancing the pros and cons of owning equipment versus leasing it, figuring out what option will work best for your business is an important decision to make.
There are a lot of factors that play into whether leasing or financing makes more sense for your business. These range from the type of asset that you’re looking to acquire (vehicles, machinery, equipment, or technology) to how long you plan to use it and how often you’ll need to upgrade. But before delving into the specific needs your company has, it’s important to understand the basics of financing versus leasing.
Leasing for Business
Benefits of Leasing
Leasing is a contractual arrangement between the owner of an asset and a person who is willing to pay to use that asset. Leasing has obvious benefits for business owners, one of which is the ability to get approval for a lease much quicker than you would if you were financing. Approval for leasing vehicles or equipment can usually come as quickly as 1â€“2 days. Leasing also offers a lower fixed interest rate, though many people don’t realize that leases come with interest rates (also sometimes called “lease rates”).
Drawbacks of Leasing
One of the downsides to leasing, however, is that you don’t get to reap the benefits of ownership. If you plan to keep machinery or equipment for a long period of time, financing to buy it outright may be a better plan. But, if you will need to upgrade machinery or equipment often, leasing can provide the flexibility of being able to upgrade without having to sell off older assets. This, in turn, can help your business stay current with technology advances without having to take on the expense of a mass upgrade on technology or business equipment.
Financing for Business
Benefits of Financing
Financing to purchase equipment or other business assets has it’s advantages too. For one, you have the benefit of ownership after paying off the loan. That also means that those supplies or machinery will add to your company’s list of assets, increasing the overall value of your business. As an added benefit, owning business assets can help you secure more substantial financing in the future which can help you grow or expand your business. It can also make your company more attractive to potential buyers or investors since tangible assets are easy to apply value to and can be sold off in the event that you need to raise money.
Another major benefit that you can reap when financing to buy is that the interest on money leaseed for business expenses is tax deductible, which can potentially save you thousands of dollars on your tax bill at the end of the year.
Drawbacks of Financing
Financing isn’t always ideal, though. If time is of the essence, and you need to obtain assets quickly, a loan may not be the best option, as it can take a much longer period to get approved. Even smaller business loans will have a more stringent approval process in place than just a leasing agreement. Gathering and reviewing financial statements, running credit checks, and finding collateral for your loan (if necessary) can seriously lengthen the amount of time it takes between applying for financing and getting money into your account.
Regardless of if you choose to lease or to lease, make sure to weigh the pros and cons of each with your banker or a financial consultant. Each business is different, and some options will make more sense than others for your company’s specific needs.
With the U.S. economy on the road to recovery and banks feeling more comfortable with lending, commercial real estate lending is expected to pick up significantly over the coming year nationwide as well as here in Maryland. If you’re in the market for commercial real estate or want to increase your company’s assets, purchasing your company’s operating space or expanding operations to other locations is a good move.
However, buying commercial property is a big step and one that requires a lot of thought and planning. In the right circumstances, it can be a hugely beneficial move, creating more value for your business and also allowing you to potentially add new revenue streams to your bottom line. But before you jump in, there are three things you should know about commercial real estate lending in Maryland.
Business and Personal Credit
Business credit is a common tool for helping banks figure out how creditworthy your company is, and what the likelihood is of you being able to pay back a commercial real estate loan. Building business credit takes time and is not unlike building a strong personal credit history.
Making vendor payments on time is a great way to start building business credit, as is opening up a business credit card that you pay off each month. Keep in mind, though, if your business doesn’t have sufficient credit, the bank will need to pull your personal credit history to approve you for a loan. And, just like with personal loans, a better credit history will get you much more favorable loan terms and lower interest rates.
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Understand the Appraisal Process
An appraisal of the commercial space intended to be purchased will have to be completed before a commercial real estate mortgage can be approved. The purpose of an appraisal is to figure out how much money the bank will need to lend to the business owner, as well as what the actual value of the property is, since it acts as the collateral for the loan. Additionally, an appraisal will help make sure you’re paying a fair price for the commercial real estate you’re interested in buying, based on similar properties and other available housing and neighborhood data.
The appraisal process for commercial real estate is quite different from the appraisal process for residential real estate. Commercial real estate appraisals are undertaken by the lender and a full appraisal can take anywhere from a few days to a few weeks. While a lot of different factors play into an appraisal, there are a few that are standard to any appraisal.
First, an appraiser will conduct an inspection of the space. This is to check the size and the condition of the building. Additionally, an appraiser will research the neighborhood the space is in, as well as similar buildings in the area, and draw upon publicly available data to get a well-rounded and unbiased value for the property.
Be Patient Throughout the Approval Process
Getting a commercial real estate loan is a time-consuming process. From gathering all of the right financial documentation and finding the perfect commercial space to going through the appraisal process and getting a decision from the lender, the entire process can take up to 4 months. Sit down with your lender and discuss what steps you’ll need to take to get the ball rolling and make sure to have all of your financial information organized and ready. This will help make the process as smooth as possible and help move things along towards closing on your commercial real estate loan.
Most small business owners know that at some point they will likely need some form of small business financing to grow and expand their business in Maryland or anywhere. Many of these entrepreneurs, however, donâ€™t have a great understanding of the different factors that banks take into account to determine the terms of small business financing.
Not understanding the factors that go into the final lending decision puts small business owners at a disadvantage: without knowing what they need improvement on, it’s harder for business owners to take steps to get better terms. This, in turn, increases the cost of borrowing and decreases the speed at which companies can grow.
The good news for entrepreneurs seeking a loan is that the factors that influence terms and interest rates for small business financing are very similar to the factors that influence personal lending terms and interest rates.
In other words, if you can figure out how to make your personal loan terms better, you can do the same for your business.
The most important factor, of course, is your personal credit score. If you run a partnership or corporation, all founders or major stakeholders may need to have their credit score checked. After that, though, there are three main factors that banks use to determine your creditworthiness.
#1: Payment History
Do you pay your bills on time? Are your vendors or previous lenders satisfied with how promptly you pay back your obligations? Are you in default on any loans? These are some of the questions that banks ask when looking over your previous payment history.
A strong history of making all payments on time and not borrowing more than you can afford to repay makes lending institutions feel more comfortable financing your small business.
How do you build up a strong payment history? A common myth states that the best way to make banks want to loan you money is to make sure that while you repay on time, you always leave a small balance on your account that generates interest. This, we’re confident saying, is probably a terrible decision. Instead, simply make sure that you always pay off balances on time. If you can pay them off early, do so. Banks, especially these days, are looking for safe investments. If they know they can loan you money and have it back when your term expires or earlier, you look like a much safer investment.
Another idea is to pay vendors on account, especially vendors that report accounts payable to an organization like Dunn & Bradstreet. This helps you build up credit easier without having to go through the process of applying for a loan, which can be difficult if you have no previous borrowing history.
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#2: Cash Flow
Do you spend more than you make? Are you reporting a profit regularly? Can you afford payments on the loan after paying operating expenses? These questions help banks understand whether your cash flow, both past and future, can comfortably sustain repayment on your small business financing.
Banks will want to look over your past accounting to make sure that you are spending money responsibly and that you have high enough margins to cover the loan, as well as possible unforeseen expenses. They will also want to take a look at your projections and compare them to your past spending to see if you will continue to operate at a profit over the term of the loan.
The best way to pass this requirement with flying colors is to spend less than you take in, and keep good records. It also helps to use a reporting service that can keep track of your historical profits and losses. Having a verifiable way to show positive cash flow can be a good way to make sure you get the best rates on your small business financing.
Always Keep Up to Date Records
#3: Business Plan and Company Structure
How are you going to use the money you get? Who controls the bankâ€™s money? What kind of projected return do you see on the loan? These questions help banks get a feel for whether you have thought your loan all the way through, as well as being able to gauge whether you will be able to pay it all off by the end of the term.
Make sure that your business plan is rigorously researched and supported by evidence. If you have projections for how the financing will make money for your company, be ready to support those projections with hard evidence. It also helps to have a loan point person, especially in corporations with multiple co-owners or partnerships. This gives the bank assurance that the money will be spent the way you say it will be, and that one single person will be responsible for preventing mismanagement of funds.
Is a Small Business Term Loan Right for Your Company?
Looking for capital to make a large business purchase or provide working capital for your company can be a long, arduous process, with many small business owners not fully understanding the process. With so many options to consider, it can be difficult to focus in on one to determine if it might be right for your business. The fact that banking jargon can vary so much between commercial lending and consumer lending doesn’t help things one bit. Many first-time business owners looking for a point of reference in their own personal banking are often just as lost as people who have never taken out a loan in their lives.
Few things are as exemplary of this confusion as the small business term loan. While easily being among the most common loans available to businesses, many business owners don’t actually know what a small business term loan is or what it means for their company.
What Is a Small Business Term Loan?
Put simply, a small business term loan is just a standard business loan offered by a commercial bank to a business. Most often, these loans go towards large capital improvements or capital purchases. Term loans are frequently used to purchase new equipment, renovate or expand facilities, or upgrade equipment. Less often, business term loans are used to purchase other businesses or to provide working capital.
Small business term loans often come primarily in two varieties: intermediate-term loans and long-term loans. Intermediate-term loans typically last no more than five years. They are often smaller, and more likely to be used for working capital or equipment purchases. Intermediate-term loans are usually paid monthly and are fully amortizing. Intermediate-term loans usually require collateral.
Long-term loans, on the other hand, are given out for durations of up to twenty years, or more in very special circumstances. These loans tend to be for significantly higher amounts than intermediate-term loans. They are often used to fund large-scale capital purchases or expansion, such as opening up a new plant or location, or building a new company headquarters. Long-term loans will definitely require collateral, and often include other specialized requirements such as limits on how much total debt from all sources a company can take on.
Term Loans are A great Way to Finance Your Business
Whatever small business term loan you are looking for, keep in mind that while term loans are a great way to finance your business, they always come with a very thorough approval process. You will need to open your books to the bank and show that your business is profitable enough to support the added risk. You will also need to put up some form of collateral, and will likely need to demonstrate that you have enough cash flow to repay the loan. Having a strong business plan and a historical set of projections that you have either met or exceeded will go a long way towards securing your small business term loan.
Knowing that, why are term loans considered to be a great deal? Unlike many other types of business loans, the interest rate is many times fixed and remains steady throughout the term. This gives business owners security and predictability, knowing that their loan amount will remain constant. They can be cheaper overall than other types of loans. When spending tens or hundreds of thousands on capital improvements, even a percentage point or two difference can mean huge savings. That means a much higher return out of large-scale improvements; something every business owner loves.
Many first-time small business owners see their relationship with their business bank as being entirely one way. They deposit money, they take out money, they write checks – all the interactions focus solely on what people think of as traditional banking services. This isn’t surprising, given that large national and regional banking chains work very hard to cultivate just this type of a relationship with their customers. It often comes as a surprise to many business owners that their bank can be a huge asset in terms of small business development.
Your banker can be a huge source of value when it comes to small business development. Above and beyond simply helping you with your business needs, most bankers that deal primarily with small businesses can offer advice, guidance, and valuable insight that is hard to come by anywhere else. These additional services aren’t on the bank’s website, and you won’t find them in any brochure in the lobby. Nevertheless, they can be among some of the most powerful and important services your bank provides.
Business Plan Assistance
Chances are your banker has seen a lot of business plans over the years. Often, they’ve also seen which ones are successful, and which ones are most likely to fail. This kind of business plan assistance can be incredibly helpful to formulating a business plan and working out the kinks. Because many small business bankers review business plans for loans, and then have the loan repayment information to confirm whether the business succeeded or failed, they can be invaluable in looking for flaws or holes in your business plan, and can help you shore up possible weaknesses.
Writing a small business plan is very difficult and time consuming, and many small business owners simply don’t know where to start or what needs to be put in them. While professional services exist solely for helping with business plans, these services often carry a significant cost, and rarely have the same ability to track success and failure as your banker. So whether you’re writing out your business plan for the first time, or sprucing it up and updating it in preparation for seeking financing, consider running it by your business banker and get some valuable business plan assistance.
Assistance Finding Help
You have a business, you’ve been generating record sales month after month, and now it’s tax time and you need an accountant or bookkeeper. Or maybe you’re looking to close a big deal and need an attorney to help you review the contract. Or maybe your office network has gone down and you need someone to come in and get things back online ASAP. Small businesses often run on the strength of their support services. Finding these support services can be difficult, though. Without referrals from a trusted source, it’s easy to get confused and overwhelmed by the myriad of professionals all fighting over your business.Â Predicaments like these can be a roadblock to your small business development, if you are not able to efficiently remedy such issues.
This is another area where your small business banker can point you in the right direction in terms of small business development. Especially at a local community bank, your banker is likely very plugged in to the professional services community. Bankers often have the advantage of being able to interact with a huge variety of professionals, and often have a good idea of who is working with whom and how that relationship is going. In fact, asking your banker for a recommendation is often better than going out and asking other business owners. Why? Because bankers have a wide variety of clients, and talk to people in all sorts of industries and professions, letting them get a broader picture of the people they recommend.
Want to get an idea about how the retail sector is doing in your community? You can go out and do your own research, hire a professional firm to conduct some surveys, or ask your banker. Bankers, simply by nature of their job, often have their fingers right on the pulse of their communities. While they would never disclose any confidential or proprietary information, watching accounts open and close and loans come and go gives them some pretty good insight into the state of the local economy. Talking to your business banker is a great way to prepare for expansion or contractions, identify new market segments, or determine if your business will be financially viable in a new area.