To get cash in, you need to stand out

Tips for securing a business loan in a competitive lending market

By Nathaniel Herring

Nationally, economic indicators across the board suggest a rebound, however gradual, from the recent downturn—and businesses in all industries are taking note. The Jacksonville climate, in particular, continues to slowly brighten: The metro area added 5,500 private sector jobs last year, landing the area in the top 50 U.S. markets for job growth.

As the recovery continues to take hold, many business owners are considering more aggressive expansion strategies—and lending to small and mid-market companies is on the upswing.

Yet while banks are more actively lending, some business owners are hesitant to face credit standards and the underwriting processes. Companies looking to ramp up production, invest in new product development, hire more people, and otherwise march toward greater growth and profitability shouldn’t let this stop them—but they should plan on doing some work before going to a lender.

If you are planning to seek new capital through a business loan, consider the following tips:

Take a team approach

No matter where your company is in its business cycle, it’s crucial to maintain frequent and open communication with a team of professionals: your accountant, investment adviser, banker and other professionals. A balanced dialogue—that includes advisers who are well-informed about the market landscape and your business—is critical to helping you effectively shape the direction your company takes.

Your banker can serve as an insightful business adviser. Maintaining open and ongoing communication will help you take advantage of near- and long-term growth opportunities, as well as effectively weather downturns. When you sit down with your banker, be prepared to discuss not just your borrowing needs, but your overall business situation as well.

Plan ahead

Too many small and mid-sized companies focus on landing a large account without considering the end game: meeting needs, without going under. Put simply, businesses can’t afford to commit to a significant new project without securing the capital necessary to complete the job.

A forward-looking approach is essential in financial planning; if possible, forecast six to 12 months out for anything that can make a material change or put stress on working capital. Don’t wait until you have the purchase order in-hand before getting your bank involved.

Prepare a persuasive presentation

Present a clear view of your financials. To show that your company is financially sound and capable of taking on new endeavors, support your claims with detailed income statements and balance sheets, as well as at least three years of income projections.

In short, “Sales are up!” or “Talk to my accountant,” simply won’t cut it. While enthusiasm and confidence do count, you must articulate the specific value you expect from a new infusion of capital and demonstrate your ability to repay the note.

Another tip: Tell a compelling “story.” Give the financials context and dimension by providing background. What makes your business viable? How are you unique? What obstacles have you overcome? How do you stack up against the competition? If you’re meeting with a bank for the first time, consider rounding out your story with the following details:

•Company history

•Company accreditations, credentials, awards, recognitions

•Management team bios

•Product and services overview

•Marketing analysis and strategy

•Relevant operational and production plans

•Risk evaluations

Avoid common pitfalls

Many mistakes are easy to sidestep. Here are a few tips:

Get current valuations. Many business owners overstate the value of their collateral. Even though the bank will obtain an independent appraisal, it’s important that you have a solid understanding of your assets, including land, buildings and equipment.

Use setbacks to your advantage. Banks recognize that all businesses go through ups and downs, especially in a challenging market. Rather than downplay losses, discuss how you minimized the impact and what strategies you have in place to mitigate future issues.

Time it right. Banks underwrite based on a full year of financial reports, so consider this: Would your case for financing be stronger six months from now?

Be flexible. More stringent risk management policies in banking may mean your entire borrowing needs can’t be met with a single, lump-sum loan. Be open to exploring other options, such as an incremental financing program. Success with smaller infusions of capital over time can help increase your business’s credit-worthiness while assisting with cash flow.

Also, be sure to discuss all available funding options, including government initiatives like Florida’s Economic Gardening Institute—a program to support the growth of second-stage businesses—and SBA (U.S. Small Business Administration) guaranteed loans, with your banker.

Is it time for your business to take advantage of more favorable interest rates and improved lending terms to secure new capital? From gains in national consumer confidence to a two percent drop in Florida’s unemployment rate last year, signs of economic recovery are encouraging companies to explore opportunities for growth.

Before you decide to initiate expansion plans or take on that new, large project, make sure you have a banker on your team and your financing plans secured.

Nathaniel Herring is the city president of Fifth Third Bank (North Florida) and oversees the bank’s operations in the Jacksonville market. He is a Jacksonville native and has more than 19 years’ experience in the banking industry. He can be reached at 904-486-1927 or For more information about Fifth Third Bank offers, visit

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