WOJTOWICZ: Do homework before meeting business lender

Q: I've worked with the same banker throughout the life of my 15-year-old business. I’ve had good luck and financed two expansions with the bank. The expansions were easy, partly because my banker knew my business and we had a good professional relationship. But since he retired a couple of years ago, the bank has rotated three young business lenders through my neighborhood branch. I can't keep them straight!

I don’t want to sound like I’m stuck in “the good old days,” but I appreciated being able to sit down with a banker I’ve known for a long time and talk about what I needed. Now I never talk with the same person twice. I am preparing to ask for a significant small-business loan to expand my company again. How should I prepare for the bank interview? I know I am going to meet someone I've never seen before.

A: This is a problem some banking organizations don’t consider as they consolidate branches or move people in their normal career tracks. From the borrower’s perspective, it can be frustrating to be forced to start over, telling your story every time you need something from the bank. But this is a necessary step if you want the lender to understand the opportunity you are about to present.

Obviously, the person you will meet at the bank holds the key to whether you will be able to expand your business at this time. And you may be one of several business owners who will ask this person for a loan in any given week. So you want to make it as easy as possible for him or her to decide that you and your company are worth the bank’s risk.

Look back to the times you financed previous expansions with the banker who is now retired. Before you saw him, you must have sat down with your accountant, lawyer, business partners—or whoever was relevant to the project—and written a complete business plan, secured an estimate for construction, and made sure you could generate the profits necessary to pay off the loan. Then you made an appointment with your banker and were fully prepared before you went in. After all, your banker needed to base his decision to say “yes” on facts and figures in addition to what he knew about you.

The game certainly has changed for you, but perhaps not as much as you think. (Of course, it is far more comfortable to do business with someone you know rather than a new acquaintance. It may help to remember that you were once a stranger to the banker with whom you developed a long relationship.)

When you apply for a major business loan with a banker you’ve never met, your best approach would be to be as completely prepared as possible. Do all your homework, just as you must have in past years, and have everything in order when you go to the banker’s office for that critical meeting.

You might do one thing differently: Prepare to talk in detail about your business, the plans you are making, and the reasons for expanding before you show the banker the facts and figures. Do not waste the banker’s time, but remember that you are introducing yourself as a whole person who runs a business that is important to you, your employees and your community. You must demonstrate to him or her that you and the business are more than facts and figures on paper.

And be sure to allow time for the banker to ask questions.

At this point, something might come up that you did not anticipate. For example, if this loan will be secured by real estate, you will likely need an appraisal. The bank will have a list of approved appraisers. You will need to order, and pay for, the appraisal and have it addressed to the bank. Whatever the banker’s request, follow up quickly.

When you schedule your meeting, ask for an hour, arrive and leave on time, and be courteous and professional.

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Wojtowicz is president of Cambridge Capital Management Corp.