Bank Loans

Although many business owners who need financing willautomatically think to turn to a bank for that funding,traditionally, the paperwork and processing costs involved inmaking and servicing loans have made the small loans mostentrepreneurs seek too costly for big banks to administer. Putplainly, a loan under $25,000–the type many startups are lookingfor–may not be worth a big bank’s time.

In recent years, however, the relationship between banks andsmall businesses has been improving as more and more banks realizethe strength and importance of this growing market. Withcorporations and real estate developers no longer spurring so muchof banks’ business, lenders are looking to entrepreneurs to take upthe slack.

Many major banks have added special services and programs forsmall businesses; others are streamlining their loan paperwork andapproval process to get loans to entrepreneurs faster. On the plusside, banks are marketing to small businesses like never before. Onthe downside, the “streamlining” process often means that, morethan ever, loan approval is based solely on numbers and scores onstandardized rating systems rather than on an entrepreneur’scharacter or drive.

You may be able to boost your chances of getting a loan byfinding a lender whose experience matches your needs. Talk tofriends, lawyers or accountants, and other entrepreneurs in thesame industry for leads on banks that have helped people in yourbusiness. Pound the pavement and talk to banks about the type andsize of loans they specialize in. Put in the work to find the rightlender, and you’ll find it pays off.