HAMMOND │ Content of a business plan is important, but so is its presentation when a client approaches a bank looking for a loan for that plan, according to local bankers at a forum Thursday at the Hammond INnovation Center.
“Nobody is expecting a 50-page binder with colored graphs, but I’ve also seen it come in scratched on the back of a notepad,” said Centier Bank’s Tom Neuffer. “It kind of sets up a red flag that maybe it hasn’t really been thought through.”
Neuffer joined several other bank representatives at the forum geared toward small businesses. Their discussion included the loan process, what bankers are looking for in business clients and ways to build a good banking relationship.
John Freyek, of Citizens Financial Bank, said a client’s credit history is important because it’s how the banker will know what they’re working with going forward.
“If you have a spotty credit history, we’re going to need explanations to why that is,” he said.
Freyek said bankers will ask direct questions as to where the numbers on the business plan came from.
“Try not to make up the numbers. Have some background,” he said.
Freyek said if you are a small business prospect who’s asked how much money you’ll need, don’t answer with “as much as you can give me.”
“It’s clear you have not thought out your cash flow, which is going to be the most important thing when we have the discussion,” Freyek said. “Cash flow and how you manage cash is the most vital part of any small business – of any business.
On how to build a relationship with a banker, Neuffer said some of is involves the client being proactive.
If there are any issues such as being late on a payment the client should let the bank know and be honest about it.
“The worst thing that can happen is (the banker) finds out the business is closed from the newspaper,” he said.
Freyek said when clients go to a bank they’re asking “to have their dreams financed.”
“You’re asking us to become equity partners in your idea,” he said. “You want honesty and directness from us. We absolutely need it from you.”
Freyek said there is this strange tendency among small business owners to run from the bank when they should be running to the bank.
“We should be the first person you call, not the last,” he said. “Tell us what your problems are, because chances are we’ve seen it before and we’ve probably figured a work around. We’re not scary people.”