Evaluate the Loan Worthiness of Your Small Business
Rieva Lesonsky shares questions for evaluating the loan worthiness of your business.
Getting financing for your business starts way before you ever put pen to paper for your business loan application. Would you give yourself a loan for a startup or growing business? It’s time to evaluate your strengths and weaknesses—and maybe face some eye-opening realities.
Are you what your bank is looking for? Do you look good on paper but come off as arrogant in person? Don’t underestimate the value of first impressions. Go in confident and convincing, without being pushy and condescending. Impart your passion for your business and your mission. Do some role-playing with a peer or SCORE mentor beforehand if possible. Ask this person to be honest with you about how you come across. And don’t forget your personal references from business associates, vendors and customers. Bankers want to see that you have a good name in the community.
Are you an expert in your industry? You’d better be! And you’d better come prepared to answer any industry questions that are thrown at you. Make an appointment with your local SCORE office to speak to someone who knows your industry and find out what the latest trends are for your market. If your industry is experiencing a low point (or high point), be prepared to say what your business brings to the table.
Do you know what sets you apart from your competitors? Did one of your well-known competitors just go under? How do you plan to keep your business from meeting the same fate? You should also be prepared to discuss who and where your major competitors are, what sales channels your competitors use, and how much they spend on expenses such as payroll, marketing and operations. Know where your pricing falls compared to similar businesses and why you chose the price point you have.
Are you an important part of your community? Be ready to show your community involvement and how your business will improve the business and social climate of your town or city. Today, being involved in community charities or events could make all the difference in attracting customers, many of whom want to spend their dollars with businesses that contribute to the community.