WOJTOWICZ: Prepare, then apply for small-business loan

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Q: My store needs to be remodeled to make it more attractive. Despite that, I’ve got a good business, so I also want to expand and build inventory. All this takes a lot of money and requires additional financing. How can I be sure to get the money I need?

A: The short answer: Go to a banker you know in your community and be prepared to discuss all aspects of your business, even the negative ones. Before you pick up the phone to book an appointment, review the material you will show the banker.

Your banker will need to see your updated business plan. More on updating your plan in a moment. First, review your mission statement. I hope you have one, because a concise mission statement helps you build a business plan. Why? A mission statement focuses on your company’s original goals. We all need that reminder, because everyday distractions threaten to pull us off course.

Here’s a mission statement for a local company: "Helping people help themselves.” This happens to be for a retail store, but it could also apply to a not-for-profit organization. In that regard, is it too general? As yourself: Do employees of this company understand what it means and does the statement help them keep their eyes on the ball?

This mission statement is more specific: "Solve complex network computing problems for governments, enterprises and service providers." This statement obviously defines a computer services provider. It identifies who their market is and what they do. It’s for an international company, Sun Microsystems. Their employees should be able to access the mission statement and use it to refresh their purpose, no matter their location.

To write (or refresh) your mission statement, think about what you do, how you do it and why you want to do it.

A mission statement should help sharpen your focus on your business plan. You already have a plan if you have previously obtained financing. Bring it up to date and make realistic projections for the next three years; explain what the future would look like if you did, and did not, obtain new financing.

It is often helpful to deliver your business plan, projections and request to the banker in advance of the meeting so that your time together can be more productive. This shows that you respect the banker’s time.

Be very forthright with bankers: They are adept at separating wishful thinking from meaningful facts. In other words, base all your projections on realistic scenarios, not on best-case examples. Always be able to answer hard questions about what you will do if the economy turns sour or your plans fail to help your business grow.

Be upfront when you talk about the promise—and the perils—of your business. Even a measured risk could result in failure, and your banker will want to know you understand that.

Now let’s talk about banks. Find the right one for you. You are already in business, so I assume you have established a good relationship with a commercial banker. If not, you should ask other business owners for referrals to commercial lenders in your area, and then get to know them before you talk dollars and cents.

Even if you have a strong banking relationship, be aware that you may need to make a change to best meet your needs. Recently, a business owner in a small Indiana community was advised by her company’s longtime lender to find a new bank. There was no time to build a relationship, but the business owner found a new lender on a referral from a friend and secured financing.

Anticipate every question. If a banker asks you a question that stumps you, say “I don’t know but I will find the answer and get back to you.” And then do it within 24 hours, providing ample background information.

Some business owners have successfully raised money through cloud funders such as Kickstarter, Indie GoGo and RocketHub. Other potential business funders may help, but some require you to use all or part of any retirement funds you may have saved.

The good news for you, and every business owner, is that commercial lending dollars are almost back to pre-recession levels. The Thomson Reuters/Pay Net small-business lending index (measuring new small-business loans) ended 2012 at its highest point since 2008‘s first quarter.

Among government-assisted alternative programs, the U.S. Small Business Administration supported 1.3 million 504 and 7(a) loans in the first quarter of fiscal year 2013, an increase of 11 percent over the previous year. The average amount of those SBA  loans was up 3 percent to $667,000.

The lending world is complex, but the best way to start is by preparing yourself and talking with a banker you know and trust.


Wojtowicz is president of Cambridge Capital Management Corp.


  • Wise advice!
    Wise advice for anybody considering applying for a bank loan! Particularly about the mission statement, something that is often easily overlooked. As you mention, the best advice is to be open and honest about your business, go to the appointment prepared and full of knowledge & enthusiasm. There are, of course, alternatives to the bank loan so my final piece of advice is to be aware of these alternatives, particularly when times are tough in securing finance from the banks! Mel https://www.capiota.co.uk/
  • Wise advice
    Wise advice for anybody considering applying for a bank loan! Particularly about the mission statement, something that is often easily overlooked. As you mention, the best advice is to be open and honest about your business, go to the appointment prepared and full of knowledge & enthusiasm. There are, of course, alternatives to the bank loan so my final piece of advice is to be aware of these alternatives, particularly when times are tough in securing finance from the banks! Mel Capiota
  • Small business loans
    As this person need a small business loan for their store to enhance. Lots of other business owners want to do same or start a new business. If you are applying for a business loan. Lots of things depend on your business plan. Make a good business plan that describes your profit,how you pay the back to bank, you also have to good credit card reports. Best regards, William James www.biz2credit.com

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  1. to mention the rest of Molly's experience- she served as Communications Director for the Indianapolis Department of Public Works and also did communications for the state. She's incredibly qualified for this role and has a real love for Indianapolis and Indiana. Best of luck to her!

  2. Shall we not demand the same scrutiny for law schools, med schools, heaven forbid, business schools, etc.? How many law school grads are servers? How many business start ups fail and how many business grads get low paying jobs because there are so few high paying positions available? Why does our legislature continue to demean public schools and give taxpayer dollars to charters and private schools, ($171 million last year), rather than investing in our community schools? We are on a course of disaster regarding our public school attitudes unless we change our thinking in a short time.

  3. I agree with the other reader's comment about the chunky tomato soup. I found myself wanting a breadstick to dip into it. It tasted more like a marinara sauce; I couldn't eat it as a soup. In general, I liked the place... but doubt that I'll frequent it once the novelty wears off.

  4. The Indiana toll road used to have some of the cleanest bathrooms you could find on the road. After the lease they went downhill quickly. While not the grossest you'll see, they hover a bit below average. Am not sure if this is indicative of the entire deal or merely a portion of it. But the goals of anyone taking over the lease will always be at odds. The fewer repairs they make, the more money they earn since they have a virtual monopoly on travel from Cleveland to Chicago. So they only comply to satisfy the rules. It's hard to hand public works over to private enterprise. The incentives are misaligned. In true competition, you'd have multiple roads, each build by different companies motivated to make theirs more attractive. Working to attract customers is very different than working to maximize profit on people who have no choice but to choose your road. Of course, we all know two roads would be even more ridiculous.

  5. The State is in a perfect position. The consortium overpaid for leasing the toll road. Good for the State. The money they paid is being used across the State to upgrade roads and bridges and employ people at at time most of the country is scrambling to fund basic repairs. Good for the State. Indiana taxpayers are no longer subsidizing the toll roads to the tune of millions a year as we had for the last 20 years because the legislature did not have the guts to raise tolls. Good for the State. If the consortium fails, they either find another operator, acceptable to the State, to buy them out or the road gets turned back over to the State and we keep the Billions. Good for the State. Pat Bauer is no longer the Majority or Minority Leader of the House. Good for the State. Anyway you look at this, the State received billions of dollars for an assett the taxpayers were subsidizing, the State does not have to pay to maintain the road for 70 years. I am having trouble seeing the downside.