For most businesses, there comes a time to move beyond the self-funding stage and take on some healthy debt in the form of a business loan. In fact, Eve Elliott, Vice President and Business Banking Officer at Rockland Trust, has supported more than 2,000 successful business loans during her past 11 years with the bank. On any given day, Eve helps small and large businesses in different industries with their lending needs and future financial planning.
In this piece, Eve details what business owners can expect when applying for a business loan.
Rockland Trust sees a mix of businesses seeking loans: those that are just getting off the ground and those that are established and looking for funds to expand or optimize their operations.
The businesses just getting started may be looking for capital to get the ball rolling or be sole proprietors (people who own and run an unincorporated business on their own) looking to legally form a company and separate their personal assets from the business’ assets.
Most often, businesses take out loans in order to grow. The owners might be interested in acquiring a bigger space or hoping to buy the property they’re currently renting. In some cases, owners are looking to upgrade their equipment or stock up on inventory. Or, they might be aiming to improve cash flow or take out a line of credit. Finally, the business might be changing hands and in need of extra funds to set the new owner up for financial success. As you can see, the reasons for taking out a loan are as diverse as the businesses that apply.
Creating a Growth Plan For Your Business
To match a business with the right type of loan (or loans), lenders will ask a lot of questions and request various forms of documentation. To start, they’ll need to know what the funds will be used for and discuss the owner’s overarching goals. The lending team will also take a close look at the business’ cash flow, credit and financial projections. This process requires an honest and transparent conversation, and is extremely important in establishing trust and setting the business up for success.
When lenders meet with any business to discuss loans, they’ll talk openly about whether it’s a feasible option and exactly what will happen if and when the loan goes through. Businesses will work with a multi-disciplinary team right from the start, which might include CPAs or attorneys. This team will crunch the numbers and be there to clarify any questions that come up along the way.
If, for any reason, it’s not the right time or the loan doesn’t get approved, our lenders will share other avenues and resources to help the business become lendable at a later time. There’s no such thing as a dead end!
Finding a Banking Partner, Not Just a Lender
The process of applying for a business loan, including who’s involved and how long it takes, depends on the type of loan and the status of the business.
In a general sense, businesses with a solid credit history and a few years of experience under their belt are well-positioned to secure loans. It also helps when businesses have strong business plans in place and come prepared to meet with their banking partners (homework isn't just for kids!).
The process also looks different for new versus established businesses. When new businesses meet with potential lenders about their loan options, the bankers are looking to see that the business has a stable foundation, like a strategic business plan and a compelling mission statement or vision. They’re also curious about how the business is positioned in the market and among its competitors. Most importantly, lenders need to feel certain that a new business will be able to pay back the loan and meet its terms. To verify this, they might request that the owner provide first- and second-month financial projections, among other documents.
The process often moves a bit faster for established businesses, since there’s usually less documentation and planning materials to review. The main goal is for lenders to look at how the business has performed, usually over the previous three years. It’s often around the three-year milestone that businesses require more substantial funding.
NOTE: Rockland’s lending team understands that the pandemic threw a wrench in many businesses’ finances. For this reason, 2020 is considered an outlier year when looking at records and holds less weight than other years.
Going the Extra Mile To Support Businesses
Eve cherishes the lifelong relationships that are formed between business bankers and customers. All of our business customers can be sure to have check-ins from their business banking officer, who is only a text, call or visit away!
Could your business benefit from a loan? Contact our business banking team to learn about our loan options and how to navigate the application process. Get started today by visiting our online Learning Center or stopping by your local branch.
Get the latest financial tips and advice by signing up to receive our emails.
Rockland Trust Online Banking gives you a variety of services that help you use and manage your accounts, whenever and wherever you want.
* indicates a required field.
Rockland Trust makes it easy to manage all of your accounts with our simple online portals.
Rockland Trust gives you a variety of services that help you use and manage your accounts, whenever and wherever you want.
* indicates a required field.
