Mr. Bob Fujii, formerly of Bank of Hawaii, and a National SBA Small Business Advocate of the Year offers these insights into what the bank looks for in a business in order to make the decision to grant a loan.

Key points included: 

Dealing with Banks

Steps to Open a Business Bank Account

Forms of Loans

What type of industry are you involved with?

How long has the business been in existence? Also, include market share, size, product line (supply, sales, and distribution), and profile of customers.

What is the legal form of the business? Is it a partnership, proprietorship, corporation (what type), joint venture, etc.?

What facilities are used and where are they located? What are the terms of the lease? How does it compare to competitors' facilities? What are the capital expenditures, insurance coverage, etc.?

Ideas for Funding Your Startup Business

Real Ways To Finance Your Startup

4Cs of Lending

Successful Startup

7 Characteristics

Strategic Business Success

Startup Founding Team

Venture Management

What are your existing loan arrangements, bank relationships, borrowing/repayment history, estate planning?

Provide a financial analysis, which includes accounts receivable/payable, credit policy, collections/bad debt experiences, and conditions of inventory. Are your taxes current? How is the company capitalized compared with the industry? What are your marketing plans, sales projections?

How to Determine a Software Development Budget?

Have a Professional Business Plan

Also include your business plan and associated documentation, including balance sheets, income statements, expenses vs. sales, operating profit margin, asset management, liability management, cash flow summaries, and projections and sensitivity analysis.

The Most Important Questions

In your ability to answer the above questions, you help the bank answer the most important questions:

What is the purpose of the loan?

What are the sources of repayment and quality of those sources so that the bank can devise a program of repayment that makes sense to the small business owner?

7 Routes to High Profits

Relationship Banking

After the Loan: Maintain Good Communication with the Bank