Borrowing Money for Your Business?
Essential Questions Your Banker Will Ask.

Courtesy of Key4Women, KeyBank’s program for women business owners

Asking for money is always a challenge, but you can make that process go more smoothly if you are prepared to answer the following questions.

Do you have a five-year business plan?
Banks will want to see your thinking on the potential risks and opportunities ahead. Provide sales forecasts, repayment ability and cash flow projections. If you’ve been in business for a while, add a history of your performance. A business plan not only helps you organize your business, understand your competition and focus your efforts on appropriate markets, it also can be the key to fast-tracking your loan.

What steps do you need to take to achieve your five-year business plan?
How will the influx of capital impact your business? Will it boost sales? Will it help you expand to new markets? Will it help you modernize facilities or technology that will make you more competitive? If you’re going to use it to hire more employees, how much will your sales need to increase to justify the new employees’ salaries? Show the cause and effect as much as you can to get your bank on board with your vision.

How do you stack up against your competitors?
Your bank will want to know if there is room for another player in your market, and whether your strategy fills a niche. So profile competitors and the marketplace, as well as your business, to show the full landscape of your plans – where weakness can be best exploited, and inroads made.

What makes you distinctive in the marketplace?
List the resources, materials and skills you’ll need to deliver your product or service. Describe the facilities you’ll need, their locations and operating costs, as well as the rationale for your choices. Detail your strategy for gaining profitable market share: How will you price, sell, distribute and promote your product or service? Provide a month-by-month sales forecast for the first year and a more general projection for the next two to three years.

Can you describe the depth of your management team, as well as your management succession plan?
You’ll want to show that you have a group of advisors (e.g., your banker, CPA and attorney) who offer you sound advice, information and networking opportunities that let you take full advantage of your resources. Advisors are especially integral to managing the greatest constant in business: the unexpected. Include extensive backgrounds of your advisors and management team, along with staffing plans for new talent. Also, make sure to clearly define the roles of your management team and what previous experience they can bring to success¬fully carry out those roles.

These five essential questions will certainly give you an edge in financing the future of your business. Have more questions about financing expansion? Don’t hesitate to contact your banking relationship manager.

Go to NAWBO Focus Table of Contents >>