Bank of America Understanding Commercial Lending

Choosing a lender and developing a relationship is a very important goal. Besides money, lenders can provide something almost as valuable; advice and support. By giving you insights into opportunities within your industry

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Bank of America Understanding Commercial Lending
What are the first steps in contacting a lender?
What are the basic questions a lender will ask me? … 5
How can I prepare for a meeting with a lender? … 5
What should I expect from my lender? … 6
What are the small business owner’s responsibilities
to a lender? … 6
What is a business plan? What should I include in it? … 7
How can I create a business plan that will
generate financing? … 7
What kind of loan do I need? … 8
What are different types of loans used for? … 8
Should I check my personal credit? What can I do
if I have had personal credit problems? … 9
Why does my personal credit history enter into
a lender’s decision? … 9
Does my legal status impact how much money
my business can borrow? … 10
Should I incorporate my business? … 10
Will my suppliers be looked at? … 11
Do you have any hints for dealing with
suppliers and contractors? … 11
What is the Small Business Administration? … 12
How does the “SBA Guarantee” work? … 12
What are some common financial problems
businesses face? … 13
How can I avoid running out of money? … 13
What steps should I take if my business
develops financial problems? … 14
How can my business get refinanced or
secure another loan? … 14
What is a line of credit? … 15
How does a line of credit (LOC) secured with inventory
and accounts receivable work? … 15
Should I buy or lease my location? … 16
How do I decide whether to lease or buy a
piece of equipment? … 16
Will my lender look at the lease for my location? … 17
Should I get my own appraisals? … 17
What questions should I ask when buying a business? … 18
I would like to buy a business. The present owner says he
takes half the income “under the table.”
Can I get this financed? … 18
What should be in a purchase-and-sale agreement? … 19
I am buying a franchise. What should I do before
signing a purchase-and-sale agreement? … 19
What collateral do I have to offer? … 20
Are there guidelines for using real estate as collateral? … 20
What questions will a lender ask when I request
a commercial real estate loan? … 21
What is the difference between accrual and
cash accounting methods? … 21
How much of my money has to be invested
in the business to qualify for a loan? … 22
Do I need to show how the loan money will be used? .. 22
What financial statements does my lender want? … 23
How should I handle my projections?
Should I provide “best case” or “worst case?” … 23
What can I do to make sure my cash flow
statement is good? … 24
Since my accountant handles my financial statements,
do I have to understand them? … 25
Should I prepare notes to explain items in my
financial statements? … 25
How long will my loan decision take? … 26
What should I do if my loan is rejected? … 26
Glossary of important lending terms … 27

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