WOJTOWICZ: Prepare, then apply for small-business loan

Back to TopCommentsE-mailPrintBookmark and Share

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

Post a comment to this story

We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
You are legally responsible for what you post and your anonymity is not guaranteed.
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
Subscribe to IBJ
  1. I'm sure Indiana is paradise for the wealthy and affluent, but what about the rest of us? Over the last 40 years, conservatives and the business elite have run this country (and state)into the ground. The pendulum will swing back as more moderate voters get tired of Reaganomics and regressive social policies. Add to that the wave of minority voters coming up in the next 10 to 15 years and things will get better. unfortunately we have to suffer through 10 more years of gerrymandered districts and dispropionate representation.

  2. Funny thing....rich people telling poor people how bad the other rich people are wanting to cut benefits/school etc and that they should vote for those rich people that just did it. Just saying..............

  3. Good try, Mr. Irwin, but I think we all know the primary motivation for pursuing legal action against the BMV is the HUGE FEES you and your firm expect to receive from the same people you claim to be helping ~ taxpayers! Almost all class action lawsuits end up with the victim receiving a pittance and the lawyers receiving a windfall.

  4. Fix the home life. We're not paying for your child to color, learn letters, numbers and possible self control. YOU raise your children...figure it out! We did. Then they'll do fine in elementary school. Weed out the idiots in public schools, send them well behaved kids (no one expects perfection) and watch what happens! Oh, and pray. A mom.

  5. To clarify, the system Cincinnati building is just a streetcar line which is the cheapest option for rail when you consider light rail (Denver, Portland, and Seattle.) The system (streetcar) that Cincy is building is for a downtown, not a city wide thing. With that said, I think the bus plan make sense and something I shouted to the rooftops about. Most cities with low density and low finances will opt for BRT as it makes more financial and logistical sense. If that route grows and finances are in place, then converting the line to a light rail system is easy as you already have the protected lanes in place. I do think however that Indy should build a streetcar system to connect different areas of downtown. This is the same thing that Tucson, Cincy, Kenosha WI, Portland, and Seattle have done. This allows for easy connections to downtown POI, and allows for more dense growth. Connecting the stadiums to the zoo, convention center, future transit center, and the mall would be one streetcar line that makes sense.