If you’re getting ready to talk to a banker about a business loan, it helps to understand the major factors lenders consider in deciding whether the vault door opens or stays locked -- and whether you’ll leave the bank happy or disappointed.
But before we cover how a bank evaluates your loan application, it’s worth touching on why they’ll subject your request to such intense scrutiny.
After shaking the guts out of your piggy bank and hitting up friends and family for some extra dough (See Business Finance: A Matter of Life and Debt), you've decided that you want some more financial muscle behind your business.
That means a visit to your friendly (you hope) banker.
But before you even think of approaching a lender about a business loan, there are some pretty important questions you should ask yourself.
So, you've come to terms with the fact that there's no one out there with a briefcase full of bucks just waiting for the chance to finance your new business out of the goodness of their hearts. (See Bigfoot, Small Business Grants, and Other Myths).
Nuts! So much for Plan A.
But how -- and where, exactly -- are you supposed to find the money you need to get your business up, running and turning a profit? That's probably the most common question ever posed by would-be entrepreneurs everywhere.
The world of business and finance has a language all its own, hundreds and hundreds of terms, some of them so arcane that no small business owner would ever need to understand them.
Case in point: "Accreting Principal Swap." Go on, look it up, if you dare. But pop a couple of Advil first. It's a headache in 100 words.
Still, there are some definitions and concepts that every aspiring entrepreneur should understand. Don't know your P&L from your ROI? If it's all alphabet soup to you, here are some basic terms to get you started. In alphabetical order, of course.
There's nothing worse than feeling alone and helpless, cast adrift on a sea of trouble.
And there's nothing better than, just when you think you're about to be swamped by the next wave, having someone toss a life ring and you're saved. Wheeeeew!
It just wouldn't be right if we let National Small Business Week wind down without a nod to companies that are making some really good things happen for themselves and their communities.
Minnesota has more than half a million small businesses. Owners make big commitments and take big risks. They work long hours and face long odds. And they succeed like crazy. Here are just a few stories from our Small Business Development Centers.
Success doesn't come easy when you start your own business. It takes talent, drive, guts and more than a dash of plain, old luck.
It also helps to have some rock-solid partners in your corner.
As we celebrate National Small Business Week, it's important to recognize that Minnesota’s small businesses don’t go it alone (or they don't have to, anyway).
In case you entrepreneurs have been too busy taking care of business to notice, this is National Small Business Week.
So, in your honor, the rest of us Minnesotans pooled together and got you something nice: It's the recognition and gratitude you so richly deserve. Go ahead, try it on. Feels good, doesn't it? Yeah, looks good on you, too.
It may have happened a week ago or a decade ago, but most every small-business owner can tell you exactly when they had the “Gulp!” moment.
That’s the time when the excitement, optimism, and euphoria of starting their businesses suddenly gave way to a breath-stealing, temple-throbbing, sweat-inducing panic.
Selling goods and services to federal, state and local government offices and agencies can be profitable for all companies, no matter their size or target industries. But government contracts can be especially important for the stability and growth of small businesses.
That's why government at many levels takes pains to nourish small businesses by making sure they get a healthy slice of the procurement pie.