8 Tips for Preparing to Meet with a Bank Loan Officer

Question: I am preparing to pitch for a bank loan for my business. What sorts of materials and documentation should I prepare before I meet with the loan officer? What questions should I be prepared to answer?

Question by: Paula F.

Leverage Your Assets

"You should be able to show that you have assets to back your loan in case you default on your payments, and that you have a career that can support payment of the loan, so basically, you should be able to answer the questions about how you are a safe bet for a bank to give you a loan."

- Danny Wong | Co-Founder, Advisor and Lead Evangelist, Blank Label
Banks Care About One Thing

"The bank cares about one thing - getting their money back. You should prepare an "Information Memorandum". This is a summary of a business plan and outlines the investment highlights for the bank. The things they will look at, in order of importance: Management team (experience), market opportunity, core business, growth strategy, exit strategy. They will also want to see that you are invested."

Put Your Personal Finances in Order Before Requesting a Commercial Loan

"Before you meet with a loan officer, you'll need to prepare a business case for your loan request. However, it's also very important that you put your personal finances in order. Be prepared to let the bank know what kind of collateral you can offer and to decide whether you are willing to sign a personal guaranty. (If applicable, also discuss this with your significant other!)"

- Elizabeth Saunders | Founder & CEO, Real Life E®

Be Prepared to Spend the Time Preparing

"Make sure you have a resume, a business plan, legal documents, bank statements, and good credit since this will be more based on you then your business. Why are you applying for a loan? Who will be managing the business? What will you use the funds for? What credentials do you and your team possess? SCORE can help you and it's free: http://www.score.org"

- Fredrick Nijm | Co-founder and CEO, Addoway.com
Long, Boring Business Plans Still Serve 1 Purpose: Bank Loans

"Everybody knows that 40-page business plans are largely useless, especially for nimble, lean startups. But there's still one type of investor out there that wants, or even requires, to see them: banks. "

- Jesse Davis | Account Executive , Appinions

Be Prepared for Lots of Hoops

"My first question would be - can you find creative ways to avoid a bank loan? The banking environment is particularly rigid these days and can be a major source of frustration for entrepreneurs. If there are no other options, be ready to show solid financial data. If possible, secure financing before you need it, because it is likely to be difficult to obtain when you really need it."

Give a 1-2 Min Pitch and Present a Demonstration/Prototype

"Keep your pitch between 1-2 min and make sure you speak out your idea clearly through 3-4 steps: What the product/service is? What problem it solves? Who would buy and why? To support your pitch, be prepared to present a demonstration or a prototype of your product/service. Keep it simple and get them excited. For last, give them a printed out version of your pitch & the main details. "

- Juha Liikala | CEO & Founder , Stripped Bare Media

Reveal Your Customer

"Many business loan pitches are bogged down with numbers, projections, and lofty ideals. The bottom line of any business is the customers who buy the products and services. Know your customer inside and out. Build a case for why your customers will buy from you and how you'll build a lasting relationship with them."


A Solid Plan

"A solid business plan, letters of recommendation, what is your expected ROI for your business, a descriptions of who your customers are, show that you have a proven track record of generating sales among a similar market, show your long term plan for the future. You also need to show good credit history, and must be willing to give up equity in any assets that you you own."

Number Game!

"What you need is a Business Plan with solid financials - Balance sheet, Cashflow, Income Statement, Ratio Calculations, along with the Projections for Revenue (money you'll make in future) & P&L (future profitability). Be prepared to answer: where will you spend/ invest the loan money, do you've a collateral to secure the loan, how will you pay back, how's your personal credit & income situation? "


About YEC

The Young Entrepreneur Council (YEC) is an invite-only organization comprised of the world's most promising young entrepreneurs. In partnership with Citi, YEC recently launched StartupCollective, a free virtual mentorship program that helps millions of entrepreneurs start and grow businesses.

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