Answers from Flintview Business Capital in San Luis Obispo, California to common questions about business funding requests, from what a bank reads in an application to how a credit line differs from a loan.
What Do Banks Want for a Business Loan? Nail Tables, a Remodel and the Answer for Salon Owners
Banks want evidence that the business can repay: a record of income in bank statements and tax returns, manageable existing debt, the owner's credit history, and a clear purpose for the money. For a salon buying manicure tables and remodeling, the purpose is the quote and the bid; the income is the booking deposits. Non-bank lenders read many of the same records and may weigh them differently.
What Do Banks Look for in a Business Loan? An Example With Dumbbell Racks
Banks look at cash flow first: whether the business earns enough, after its costs and current debt payments, to cover the new payment with room to spare. A gym buying dumbbell racks would show membership drafts, rent and payroll, and the equipment quote. Collateral and a personal guarantee may be asked for as well.
What Do Banks Want to See for a Business Loan? An Example With Room FF&E
Banks want to see the documents behind the numbers: business tax returns, financial statements, bank statements, a list of debts, the lease, and the owner's personal financial statement. An inn buying room furniture, fixtures and equipment would add the renovation plan and quotes. Requirements differ, so ask each lender for its list before gathering everything.
What Do Banks Look for When Giving a Business Loan? An Example With Walk-In Coolers
When giving a business loan, banks look for a match between the loan and its use. A restaurant asking for walk-in coolers on a short loan, or for payroll on a long one, raises questions; a request that matches the term to the life of the purchase reads more clearly. See funding options, how a request moves and the request form.
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