Borrowing matters Featured

8:00pm EDT May 23, 2005
Commercial lending is still one of the most important functions for banks today. Why? Because thriving businesses are important to communities and economies on all levels.

Commercial banks offer a number of commercial loans, business loans and real estate loans designed to help you and your business grow. When starting or expanding your business, concern and worry are normal. After all, it is your business.

Securing a loan to help it grow may seem intimidating, but it could not be easier.

Credit is the lifeblood of American businesses, especially small and medium-sized businesses. Credit will allow you, the business owner, to build inventory, purchase needed equipment, create new lines of merchandise, purchase real estate and ultimately help your business grow.

Research has shown that aside from personal savings, banks are the next major source of capital for starting new businesses and helping them grow and expand.

Before you go to your bank, prepare the information loan officers are going to be looking for. By arriving prepared, you can speed lender consideration for your application. By presenting your case in the best possible light, you will increase the chances of the bank meeting your financial needs.

For the small and medium-size business owner, enlisting the assistance of your financial counselor (CPA, CFO) is recommended. Below are some general questions to answer that can help simplify the loan-securing process.

* How much money do you need?

* What will the loan be used for, and for how long?

* How are you going to repay the loan, and under what terms?

* Who is applying for the loan? You? Or are other legal entities involved, such as a corporation or a partnership?

* What assets can you pledge to secure the loan?

Develop a written plan

* Write an executive summary of the loan you are applying for.

* Prepare a business plan

* Prepare a marketing plan

* Have two years of financial statements and tax returns for the business and any partners

Finally, you'll want to lay down some groundwork. When seeking a loan for your business, you are essentially asking the bank to become your business partner, with the exception that banks are not as patient as most partners in expecting repayment.

Banks would like to know some additional information about you and your business, to make sure you have the ability to repay the loan. What shape is your business in? Have you been in the red for the last couple years? If so, why do you think that is? Do you have a plan of action in place to get out of the red?

On the reverse side, has your business been doing so well that you can't keep up? How are you going to ensure that quality doesn't suffer?

Small and medium-sized business owners in Southeast Michigan have a significant advantage in seeking a commercial loan. The area has many experienced bankers who understand the local economy and the needs of local businesses.

When shopping for a loan, talk with a number of banks and select one that meets your needs for today and for the future.

Craig Johnson is president and CEO of Franklin Bank, a full-service financial institution that has serviced Southeast Michigan for more than 20 years. Franklin offers its commercial customers many specialized services, including next-day funds availability, low-cost courier service, extended branch hours, Web banking services and a streamlined small business lending program. Reach Johnson or one of Franklin's professional sales associates at (248) 358-4710 or at