Tips for Approaching a Lender
Updated: Mar 16, 2021
As the financial realities of the COVID-19 crisis begin to impact small businesses, we reached out to local lending partners for some advice on how to approach a bank about your circumstances. Below are a few pointers and programs to consider. We hope this is helpful.
Businesses with an existing lending relationship: Any business experiencing hardship due to the impact of the coronavirus should contact their lender right away about temporary payment modifications or to increase existing working capital lines of credit. Although this is a difficult conversation, it’s better to have it sooner rather than later.
Businesses that are considering financing: If a business does not currently have a lending relationship with a bank but needs to apply for financing, it is highly recommended that they get their financials in order before making the initial outreach. That means PDFs or copies of the following:
2017-2019 complete business tax returns
2017-2019 business financial statements (they don’t have to be accountant prepared, Quickbooks Profit & Loss and Balance Sheet reports are fine)
2020 year-end Income Statement and Balance Sheet (and tax return if available)
Current dated Accounts Receivable Aging and Accounts Payable Aging reports
2017-2019 complete personal tax returns (state and federal returns including W-2 forms, K-1s, etc.)
A current personal financial statement for the business owner(s) - request this from your lender because each can have different versions
With this information, a lender can give a business owner meaningful answers in a timely manner and it will allow a lender to accelerate a loan request.
Non-bank lenders: For businesses that don’t believe they qualify for traditional financing, Allies for Community Business is a reputable non-profit lender based in Chicago offering small business financing and coaching services. They most commonly provide loans of up to $25K. They do not base their decision on credit score, they do not require collateral, and they have a flat interest rate of 9%.
Post originally written by: Erik Fjeldstad, SVP-Chief Lending Officer, Forest Park National Bank Matthew Howe, VP-Commercial Lending, Old Second National Bank
Edited slightly by Eric Mazelis, OPEDC for relevant content
