Financial LiteracyFinancial LiteracySupplements

How to Get a ‘Yes’ to Your Loan Request

Congratulations – you are the owner and operator of a business that is five years old, generating revenues, paying payroll and personal property taxes, and employing local residents as full-time wage-earning employees. In fact, you’ve generated a profit at least three of the five years you’ve been operating. You’ve heard that there is a process to obtaining a business loan. Now, you desire to grow the company organically; however, you are perplexed as to how-to “ask the lender” for the financing needed to sustain and grow your business.

For the past 40 years, FSC First has provided creative business financing solutions to support emerging growth companies. However, over the last 20 years, FSC First has generated legacy impact in Prince George’s County, MD by providing business development and technical assistance to more than 1,700 businesses. We have approved more than $121.9 Million Dollars in Direct Loans, Closed and Funded an average of $2.5 Million Annually, and was instrumental in assisting business owners with attracting $1.4 Billion in Additional Public and Private Financing.

We offer the following tips and strategies to enhance your opportunity to gain a “yes” to your loan request.

1. ​It is important that you speak with the lender in advance of the critical time frame when you will actually need the capital. Ideally, the lender should be somewhat familiar with your company’s products and services, and the challenges you’ve faced and overcome. Perhaps they have seen you making deposits at their financial institution or networking at various business outreach events. Either way, you should not be a stranger when approaching the lender with a request for financing.

2.​ Prepare and practice your elevator speech – who you are, the name of your company, and your latest accomplishment. For example, perhaps your company was just awarded a contract as a prime contractor, or you’ve just generated $500,000 in revenues, or doubled your workforce, or achieved some other notable milestone. It is always good to keep a success story top of mind and be ready to share.

3.​ Speak to your need and have a specific dollar amount in mind when you approach the lender. For example, as a result of your company’s latest accomplishment, you will need to cover some capital expenditures to acquire additional leased space, more equipment to automate your operations, or hire more employees; and explain how investing in these areas will not only increase revenues but also increase your bottom line thus generating a profit.

4.​ Recognize that the lender will not have much time to fully evaluate the need on the fly. So, be prepared to leave a solid loan package that they can review and respond to within three to five business days.

5.​ At a minimum, the pre-qualifying loan package should include the following:

▪ An Executive Summary – that defines the history of the company, the management team, and the objectives for seeking debt financing.
▪ The recent three years of financial statements and tax returns on the operating company.
▪ Three years of personal tax returns on each owner of the company.
▪ Two years of month-to-month cash flow projections and the supporting assumptions that describe how you will achieve the forecasted revenues, cover the forecasted expenses, and demonstrate your ability to repay the loan. One may need to consult their financial advisory, Accountant or CPA for assistance with developing this document.

Don’t be intimidated! Remember, obtaining a business loan is a process and not an event. Be prepared to provide timely clarifications and further documentation to the lender, upon request, until they are satisfied that making a loan to your company is a good credit risk. It is important that the lender understands your competitive advantage in your industry or community.

FSC First manages several economic development finance programs and operates a revolving loan fund in partnership with local and regional financial institutions, including: BB&T, Capital One, Industrial Bank, Old Line Bank, PNC Bank, Revere Bank, Sandy Spring Bank, Sona Bank, SunTrust Bank, TD Bank and Wells Fargo Bank.

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