Critical Steps to Securing a Small-Business Loan

Jun 21 2018

If you’re thinking about starting or purchasing a business, planning is paramount to securing a small-business loan.
Sign on business door that says "Welcome, we are open"

Bell Bank is willing to lend to new or start-up businesses, but you have to prepare well in advance, and make sure your personal finances are in order.

1. Credit

Pay down credit cards and personal debts. Make sure your credit report is clear of any outstanding collections and that your revolving debt and credit card balances are minimal. Our lenders will want to see that you pay your loans on time.

2. Cash

Save up cash for working capital and a down payment on your loan. You may need to consider downsizing your house, vehicles and/or selling your “toys” to help fund your business.

3. Outside income

You may need to keep your current job or live off of a spouse’s income until your business is well-established. Be prepared for it to take 5 years or more before the business can support your living expenses.

4. Income-tax returns

Our lenders typically require 3 years of personal income-tax returns as well as income-tax returns for any business ventures with which you have been involved.

5. Financial statement

Our lenders will need a detailed statement of your assets and liabilities. They will look closely at your cash, liquid investment balances and equity in homes or other real estate.

6. Outside investors

If you are not financially positioned to start a business, look into funding from outside investors or loan guarantors.

7. Business plan

Our lenders want to see that you’ve thought through all aspects of your business from potential obstacles and how you would overcome them to projections for your business’ first 3 years. Read on for the 5 things our bankers look for in a great business plan.

Securing a small-business loan might seem daunting, but you’ll have an easier time if you’re an organized, financially healthy borrower. We’re willing to meet with you, even early in the process. Contact us and we can answer your questions, give you insight into how the financing structure could look and refer you to other sources for guidance.


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