Most business owners preparing to apply for financing focus on the numbers they can already see. Revenue, expenses, what is in the account this month. The thing that most often holds an application back is not any of that.
Hakim Kassam, Director of SBA Lending at Midwest BankCentre, names the mistake he sees most often from owners seeking SBA financing.
Skipping the Business Plan
The most common misstep is arriving without a detailed business plan and solid financial projections. It is easy to treat that as paperwork produced for the lender’s benefit. It is not. The exercise of building it is what forces an owner to answer questions the business will face whether or not anyone ever asks for the document.
A thorough plan requires you to work through:
- Your customers, and who you are actually serving
- Your competitors, and where you sit relative to them
- The market you serve, including its size and direction
- Your vendors and suppliers, and what your operation depends on
- The political landscape, and the external conditions that shape your industry
Each of these factors into whether a business succeeds, in the short term and over the long run. An owner who has genuinely worked through them is a stronger applicant, and more importantly, a better operator.
Preparation Is the Advantage
Coming to a lender prepared changes the nature of the conversation. Instead of assembling basic information under time pressure, you are discussing strategy and structure with someone who can help you think it through. That is a meaningfully better position to negotiate from.
Hakim also explains what SBA loans can be used for and how down payments and terms work.
For more information about SBA loans, visit us online or stop by one of our local branches. Our team can tell you what to have ready before you apply.