A small business loan can help founders open a business, manage supply costs, and grow their operations. But securing a bank loan can be both challenging and time-consuming. Owners may need to show lenders comprehensive business plans, current and projected financial statements, as well as documentation like your business and personal bank statements and tax returns.
We recently asked the Hello Alice community to share their top advice on securing a bank loan for small business owners. Below, some tips you shared with us.
Look for Bank Loans Locally
One founder, who successfully secured three business loans during COVID-19, recommends owners seek out loans from your immediate community:
“Look local. The biggest loan I received during the pandemic was from my city. And I knew that it was being offered because of the emails that one of the local business associations I belong to sends out regularly. So be connected and read all the fine print.”
— Erika Salloux, CEO of Living Harmony
Don’t Give Up on Your Loan Applications
Filling out loan applications can be time consuming, with each lender having its own requirements and terms and conditions. But the same founder also shares that tenacity is key when it comes to loan applications:
“When it came to the PPP loan, I did have to spend heaps of time making sure I understood the terms and reaching out to my bank, but it paid off with the application being accepted. Other business owners who were not as tenacious as me, gave up, thinking they would not get it.”
— Erika Salloux, CEO of Living Harmony
Get a Small or Local Bank
Larger banks can be hard to reach when submitting important loan applications like the PPP loan. The founder, Erika, recommends owners bank with smaller, local financial institutions. They can process loan application quicker and provide personalized customer support:
“Before the pandemic I had been meaning to switch from my big bank, who it is virtually impossible to get on the phone, to a local bank. But I had not done it yet. So, getting my PPP loan through that big bank proved to be an uber chore. I ended up calling a fellow entrepreneur’s local bank to get my questions answered. They were being heralded in the press for their above-and-beyond work with small businesses’ PPP loans. They answered the phone immediately when I called, were super friendly, and were so helpful to me overall throughout the process. And my business did not even have an account with them. You might guess that they are going to be my new bank now.”
— Erika Salloux, CEO of Living Harmony
Don’t Be Afraid to Look For Different Funding Sources
Not into bank loans? There are other opportunities such as grants and pitch competitions that can help you secure funding for your business. This owner secured funding from pitch competitions, grant programs, and investors. Overall, she recommends founders “don’t be afraid to seize every opportunity:”
“It’s a long cycle time, and there’s a lot of R&D, but you have to be scrappy and look for funding through [pitch] competitions, grants, private equity, and more — none of that is a waste of your time. It’s important to strategize, and in materials, you can never lose sight of your customers. This technology may be at 80%, but it’s 100% going to solve my customer’s problem. And that’s what you need to move forward with. Don’t be afraid to seize every opportunity.”
— Haley Marie Keith, co-founder of Mito Material Solutions
Need help on getting your loan application accepted? Check out the Secure a Bank Loan Guide for more helpful tips. Subscribe to our our newsletter a chance to be featured in an upcoming blog post.