Although many business owners who need financing will automatically think to turn to a bank for that funding, traditionally, the paperwork and processing costs involved in making and servicing loans have made the small loans most entrepreneurs seek too costly for big banks to administer. Put plainly, a loan under $25,000--the type many startups are looking for--may not be worth a big bank's time.
In recent years, however, the relationship between banks and small businesses has been improving as more and more banks realize the strength and importance of this growing market. With corporations and real estate developers no longer spurring so much of banks' business, lenders are looking to entrepreneurs to take up the slack.
Many major banks have added special services and programs for small businesses; others are streamlining their loan paperwork and approval process to get loans to entrepreneurs faster. On the plus side, banks are marketing to small businesses like never before. On the downside, the "streamlining" process often means that, more than ever, loan approval is based solely on numbers and scores on standardized rating systems rather than on an entrepreneur's character or drive.
You may be able to boost your chances of getting a loan by finding a lender whose experience matches your needs. Talk to friends, lawyers or accountants, and other entrepreneurs in the same industry for leads on banks that have helped people in your business. Pound the pavement and talk to banks about the type and size of loans they specialize in. Put in the work to find the right lender, and you'll find it pays off.