Confessions of a Loan Officer, Part 1

I get a lot of the same questions, and they lead me to believe that there are a lot of misconceptions out there about getting money for your business.  These are some of the things I wish people knew before they applied for a loan.

First, there is no such thing as hundred percent (100%) financing. You as a business owner will be required to put money into the business before the lender will provide financing. Some down payments may be as little as 10%, others may be as large as 50%, depending on what assets are being purchased with the loaned funds.

Second, your credit history is very important. It’s strongly recommended that you get a copy of your credit report before you meet or make application with a lender. Sometimes there are negative credit items that may need to be explained or somehow mitigated. If you don’t have perfect credit, don’t be surprised if a loan officer wants to talk about it.  Here’s a great source for a free credit report.

Third, the lender will ask for personal guarantees from all business owners that have a 20% ownership or greater (so if you want to be a silent partner you may not own more than 19% of the company if you don’t want to provide a personal guarantee). Even if you are incorporated, lenders will ask you to personally guarantee your business loan.

Fourth, there’s no such thing as a free government grant for individual small businesses. Contrary to what some misleading sales pitches may suggest, no government source, including SBA, provides free money.

Finally, the SBA does not lend money directly to small businesses for any purpose. Instead, SBA is a guarantor, it guarantees or insures loans made by lenders. Most importantly, an SBA guarantee does not make up for a previous bad loan.

Now, all of this may seem pretty disheartening.  But never fear: loan officers have the answers, Community Development Financial Institutions like ours do provide lending for small business, and Business Impact NW is a mission-based lender.  That means we work with you to make it work!

Check out the links below for more information on getting funding for your business.

About the author

Sunil Nair

Sunil Nair is currently a commercial loan officer for Business Impact NW. His responsibilities include meeting with clients to evaluate their financing needs, underwriting the credit worthiness of various business entities, and providing servicing functions once the loan is closed and funded. He’s also involved in marketing and Business Impact NW outreach programs.

Mr. Nair has spent his 20+ year career in the financial services industry. His positions included Loan Officer at Bank of America and Second Vice President for the private banking unit at JP Morgan Chase. Most recently he operated a financial consultation firm which allowed him to travel abroad to Canada, United Arab Emirates, Singapore and India.

Mr. Nair is a graduate of the University of Denver, Daniel School of Business with a Bachelor of Science in Corporate Finance and a Bachelor of Arts in Marketing.

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Sunil Nair View posts by Sunil Nair

Sunil Nair is currently a commercial loan officer for Business Impact NW. His responsibilities include meeting with clients to evaluate their financing needs, underwriting the credit worthiness of various business entities, and providing servicing functions once the loan is closed and funded. He’s also involved in marketing and Business Impact NW outreach programs. Mr. Nair has spent his 20+ year career in the financial services industry. His positions included Loan Officer at Bank of America and Second Vice President for the private banking unit at JP Morgan Chase. Most recently he operated a financial consultation firm which allowed him to travel abroad to Canada, United Arab Emirates, Singapore and India. Mr. Nair is a graduate of the University of Denver, Daniel School of Business with a Bachelor of Science in Corporate Finance and a Bachelor of Arts in Marketing.
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