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Financing: ABC's of Approaching the Bank

Guest post by: Daniel Plechac

Article Overview: Got the perfect idea and now all you need is money, but how do you approach the bank or potential investor you ask? Simple! Follow the simple ABC's of this article and you're ready to walk in and secure the financing you need!

Financing: ABC's of Approaching the Bank

95% of why new businesses fail is because they’re under capitalized. Smaller companies rely on funding from financial institutions, family members, and other networks to help them not only set up shop, but also to allow them to establish themselves as a serious business venture. Too often, businesses will attempt to make do with as little funding as possible, hoping that immediate profits will make up the different. While this does happen, a more reliable business model includes applying for small business loans. By following these three ABCs of approaching a bank, businesses can increase their chances of getting the funding they need, without the hassle.

If there are any outstanding credit issues for the company, these should be resolved before the management goes to the bank. These issues might include past due payments, credit card fraud concerns, etc. The cleaner the credit history, the more likely a bank is to loan money to the applicants.

Assemble a Clear Business Plan

Many smaller businesses avoid crafting a professional business plan. Whether they are unclear about what they want their business to do, or they are simply afraid to find out their business idea is not viable, the excuses vary. By creating a clear business plan, the company can show the bank there are well-defined roles, and a plan for making profits quickly. Though the best-laid plans may not always come to life, a business plan is essential when meeting with a bank. This business plan should include:

· Executive Summary – This section should discuss the company, what it does, and who is involved, current market trends, etc. Show the uniqueness of your business in relation to others in your market, why you will succeed.

· Market Analyses – Comparing other sources of competition to the business will help to show the bank the viability of the business idea.

· Management Team – The current management team should be listed in the plan, along with their related qualifications (including yourself).

· Critical Risks – If there are any risks within the business, these should be outlined and described here, how will you mitigate them.

· Financial Model – Describe what you are using the money for and how it will help you succeed.

Bring the Projected Profits

The projects profits should also be a part of the business plan, helping to show the financial institution that the company will be able to pay back the loan in a timely fashion. While these profits are certain to be different in real life, realistically estimate the projects, based on marketing strategies and the competition in the area, will help to outline the financial health of the company for the long term. Have projections accountant prepared for accuracy and increased credibility.

Conduct Yourself Professionally

Always remember that a big a part of people helping you depends on them liking and trusting you. Therefore, how you conduct and present yourself is crucial to the success in procuring financing for your business.

By following these ABCs of approaching a bank for money is a strong start to securing a loan. However, the business must follow through on its promises in order to ensure the loans are repaid as promised.

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Article Tags: business, capital, financing, investor, money, seed, startup, startup



Related Forum Posts
You can see my Bank statement......... - Hi there, Today we are bombarded with 'Business Opportunities' by the multitude. I believe it is possible to earn a lot through the internet, but it is hard work. Nobody gets it very easy on a long term basis. [b][b]How much notice do people take[/b], [/b]when the Bank Statements are shown as means of 'how credible' their business idea is? Are they always totally true? They look authentic. The whole industry is growing rapidly. What is your experience? Is there any regulation in presenting the 'Bank Statement' or other statements from 'Click Bank' etc ? Kindest Regards Beat "Unlock People's Potentials!"
BDC - [quote="IWDCanada":jib6tqt9]I think if you try to do business in the Maritimes the Business Development Bank of Canada might be able to provide grants.[/quote:jib6tqt9] On that note, does anybody have any experiences with the Business Development Bank of Canada that they would like to share? I have been considering approaching them for a business loan.
Re: BDC - [quote="Jones":255lkmrn][quote="IWDCanada":255lkmrn]I think if you try to do business in the Maritimes the Business Development Bank of Canada might be able to provide grants.[/quote:255lkmrn] On that note, does anybody have any experiences with the Business Development Bank of Canada that they would like to share? I have been considering approaching them for a business loan.[/quote:255lkmrn] I'll be working with the BDC later this month on a few projects. From what i've been told they are really great when it comes to small business. Their loans have a little higher interest but their payment terms are a lot easier to swallow. I can give you a contact if you need.
Re: Interrealtionship between financial statements - Hi there, It is not necessary to post each transaction in all of the separate financial statements. In any given transaction, you will post an equal amount of debits and credits to the associated accounts. An example would be if you were to write a check for $500 to office depot for office supplies. The posted transaction would be: DEBIT Office Supplies $500.00 CREDIT Bank Account $500.00 Once the transaction is posted, it will automatically show up on the appropriate financial statement report. In the above example, you would find the Bank Account transaction on the balance sheet and the office supplies transaction on the profit and loss statement. I hope this is clear! Please let me know if you have any other bookkeeping questions. I would be happy to help, Stephanie Horne
Re: Character Design - using it effectively in marketing - Hmmm... I wonder if that's what Royal Bank of Canada is doing with the animated character of the man in a bowler hat?


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