Finding Your Small Business Banking Partner

Finding Your Small Business Banking Partner

Capital fuels small businesses. Whether a start-up or established company, small businesses need resources to expand, keep up with growth, and branch into new product categories or geographies. But company owners often wonder: would a bank lend me money?
It’s not as difficult as you might think. Financial institutions like to get in on the ground floor with small businesses and be their partners as they grow. Companies just need to show a steady path from start-up to growth or a track record of solid financials to power an expansion.
“We want to make sure the deal makes sense for everyone,” says Chris Albrecht, director of Small Business Administration (SBA) loans at St. Paul–based Sunrise Banks. “We spend a fair amount of time making sure it makes sense from an underwriting perspective and that the financing matches the business’ needs.”
Banks like Sunrise that engage in SBA lending provide financing packages for different business needs. For example, an SBA express loan establishes a line of credit, while an SBA 7(a) loan often finances equipment, permanent working capital, or commercial real estate. Many offer non-SBA options, too.
But before banks decide what kind of loan package to assemble, they need information to determine whether a company is ready for financing. Some of that assessment includes presenting a business plan. It should outline management experience and demonstrate fitness through facts and figures like number of employees, sales results, or inventory. Companies also generally need collateral—such as equipment, real estate, or cash flow—to prove that they are good for the money. 
Entrepreneurs might find the business plan process daunting, but there are organizations that can help. Consider reaching out to nonprofits that offer business advice and mentoring, often for free, like SCORE, WomenVenture, or Meda.
“The business plan is really important. It’s the road map for the company that makes you stop and think about what business will look like in the first month or seventh,” says Albrecht. “It may even make you rethink your original idea, and that’s okay.”
As far as selecting a bank goes, Albrecht suggests networking with other small business owners or companies in your industry to find out where they secured financing. Some company owners prefer working with community banks that serve the same ecosystem of customers. The banks often serve as resources for networking or referrals to other professional advisors.

While online banking services are important for many companies, small business owners should consider connecting with lenders who are available to meet in person and build a relationship.
“It’s good to have someone who knows you, who you can bounce ideas off of, who can connect them with their networks,” Albrecht adds. “They are great resources for small businesses for financing and more.”

Chris Albrect | Director of SBA
Sunrise Banks, N.A., based in St. Paul, Minnesota, seeks to radically change the way urban communities and underserved people thrive by empowering them to achieve their aspirations. Sunrise Bank is Member FDIC.

Things you should know
Small businesses and start-ups should consider these steps when seeking to secure financing from a bank:

  • Determine how much money you will need and build a case for securing it.
  • Prepare a business plan detailing concept, goals, strategy, and financial information like cash flow or balance sheet.
  • Demonstrate your financial track record of at least two years, including sales, employees, or inventory.
  • Seek help from outside resources on writing a business plan or getting advice from groups like SCORE, WomenVenture, and Meda that work closely with entrepreneurs and business owners on growing their businesses.