By nbkc bank
Hey there, small business owner! If you’re reading this, you’re probably ready to take the next step in growing your business. But even if you’re (finally) turning a decent profit, expansion can feel out of reach. That’s where a small business loan comes in.
If the thought of any kind of new debt seems scary, that’s understandable. But the right loan, at the right time, can be transformative for your business — or even necessary for your growth.
You know you want a loan. But how much? In some cases, there’s an easy rule of thumb. For real estate, banks typically require at least 20% as a downpayment, while new equipment downpayments range from 0-20%. In accounts receivable and inventory, banks will advance 80% and 50% respectively.
But keep in mind, a good banker is your best friend. By working together, alongside a CPA, business consultant, or part-time CFO, you can sketch out exactly what your business needs. Come prepared with a cash flow forecast one to four quarters out and a financial projection for the longer-term.
Getting the right-sized loan is important. One that’s too small can create cash flow issues. Whereas requesting too much can send the bank the wrong signal — like, say, you don’t know what your business needs, or potentially, that you plan on using the money outside of what’s been agreed upon.
At nbkc, we offer online small business loans from $25K to $75K, which combine the speed and ease of online lending with the low rates and service of a bank. You can apply online, or visit our list of lenders if your loan needs exceed $75K.
First up, reach out to a few banks. It may take several conversations to find one that provides what you want. Not all banks will lend to your kind of business — or provide the exact loan you want. And those that do offer loans will have a variety of interest rates, amortization periods, maturities dates, advance rates, and origination fees.
Remember, the interview is two-sided. Look for good communication from the bank first and foremost. They should be prompt, efficient and, of course, take an interest in your business. A good banker will try to learn your operations inside-out, while gaining an understanding of the challenges you face.
Like any good relationship, your banker should be willing to have hard conversations, giving direct feedback—even if the reality isn’t rosey. Watch out for any bank that makes promises or guarantees early in the process, especially if they haven’t done a full financial analysis. They may be trying to bait-and-switch you into a higher loan rate down the road.
Finally, look for a bank that’s well-reviewed (obviously) and the right size (maybe not so obvious). When it comes to size, a bank that’s too big could treat their smaller customers as disposable. Whereas a bank that’s too small may not match your growth needs a few years down the line.
Once you’ve picked a bank, they’ll review your financial standing, establish terms, and fully underwrite the loan. Compared to credit cards and most online lenders, the underwriting process from a bank will be more substantial. Documentation needs can vary, but get these ducks in a row for starters:
With documents in hand, your bank will put the loan opportunity through a full credit and approval process. Most banks require a credit officer to approve the loan — or it may go to a committee where bank executives and board members vote.
If you’ve been in business less than a couple years, or your personal credit score is below 670, then you may have trouble getting approved. They’ll also want to make sure your cash flow can cover payments on the loan and that your business leverage ratios aren’t too high.
Through a traditional bank, approval decisions can be made in a few weeks — assuming things go smoothly. But that timeline can extend into a few months if extensive information is requested from the bank, or there are delays in responding to underwriting questions.
At nbkc, we combine the flexibility of a bank with the speed of an internet lender. And for many online loan applications, you can expect approval and funding in as little as five days.
A small business loan from a bank offers flexibility, and lower rates. But depending on your needs, banks can offer more specialized small business loans too.
But, hold on. Financing comes in many forms, right? While it’s worth exploring your options, a small business loan from a bank will almost always be the least expensive kind of capital. Other options include:
Traditional banks have a lot to offer. But traditional lending demands long approval times and mountains of documentation.
At nbkc, we’ve created a small business loan that combines the benefits of online lending and bank-backed loans. Our Online Small Business Loan starts with rates as low as 5.95%, and approval in as little as five business days for funds between $25K-$75K.
If you’re running a profitable Kansas City-area business, and have been in operation for at least two years, then nbkc could be perfect for you. We offer quick access to affordable business capital — without the pain and hassle of a traditional bank loan. Apply online today or get in touch with us if you have any questions.