Small Business Loan Packaging 101

Financing is a vital component of any successful business. In talking about business loans, there are many different roads you can travel, and thus many routes to arrive at the desired destination. However, in this article, I will discuss specifically the significance of the business loan package in securing bank financing for a growing business.

I purposefully used the term “growing” because banks love to lend to businesses that are increasing in market share and subsequently sales and profits. That’s not to say that banks don’t lend to start ups, but few if any bank will especially if the business can’t present a solid case that the business is currently generating cash flow and growing. For both growing enterprises (typically those that have existed more than eighteen to twenty four months) and start ups that are cash flowing and gaining market share, the business loan package presents to bankers a concise and straight to the point case of the business owner’s ability to handle and maximize bank financing.

The business loan package accomplishes two major goals for the entrepreneur:

1) Communicates a keen management ability and a sharp business mindset to the banker

2) Legitimizes the bank financing request for the banker.

Can you imagine the number of requests that the banker fields on a daily basis from owners that are looking for money without the ability to present a solid case for it? Think about it. Now, that’s not a knock on these business owners at all. The reality is that similar to everyday people, when business owners encounter pain, they desire to relieve themselves of it immediately without giving thought to a plan or strategy. Easy to say when you’re the one not in pain, right? Well, business owners would do themselves a huge service by taking a few moments and creating a strategy via the business loan package to dynamically increase the odds of receiving the bank financing that they need.

Before initiating the process of creating and presenting the business loan package, it’s imperative that the business owner has his or her business documents organized and in the right shape. For this stage in the business loan packaging process, I recommend the employment of either a business financing consultant or a professional bookkeeper. The business documents needed to complete the business loan package are simple in that they should already exist, the secret sauce is in the compilation and presentation of these business documents.