Know Your Business Numbers

What Banks Look for When You Apply for a Business Loan

Getting a business off the ground is no easy task. Whether you’re wondering how to get a startup business loan or you’re looking for the best commercial real estate loans, there are a lot of financing options.

Getting proper financial support starts with making sure you know how your business is doing. This may seem obvious, but knowing your numbers is important! So, what numbers do you need to know?

Profits and losses, free cash flow, overhead costs and more are all important to keep track of and stay on top of. When considering business loans, banks are looking for how well your business is doing. Knowing your numbers can help secure you a better loan!

Numbers that would be helpful to keep track of include:

• Revenues
• Expenses
• Asset values
• Debts owed
• Cash flow
• Production costs
• Profit margins

This isn’t an exhaustive list, and there may be some numbers that are more important for your company to know. However, consulting this list is a good first step when it comes to knowing your numbers and can help you start planning what else you might need to know.

How To Use Your Numbers

Business lenders take a lot into consideration when approving business loans. When you know your numbers, you can maximize your chances of getting the best business financing! 

They look at factors like your working capital to decide if you’ll be able to pay back your loan and, if so, how much you’ll be able to borrow. The working capital formula is essentially assets divided by liabilities. Your aim should be to have a working capital ratio above one.

Having a strong business plan can also help you find good business lending options. Proving to a business lender that you’ve thought about risk mitigation can help them trust that you’re capable of paying off a new business loan. When it comes to business planning, write out your vision, your target audience and how you plan on growing your revenue. You can find business plan templates online that can help you create yours.

Business financing also usually requires collateral, which is especially important for small businesses. Small business financing often comes with extra risk for the owner of the business. To prove that you deserve the best small business financing, you’ll want to provide up-to-date tax returns. These documents can prove your ability to pay back your loan.

Maximizing Your Numbers

A lot of knowing how to get a business loan starts with knowing how your business is operating. If you calculate any of these numbers and don’t think they’re going to get you the business loan you’re looking for, don’t stress. You can create a plan to bring your numbers up – knowing what to focus on is the first step.

While it may be scary to have marginal numbers, that’s common for a small business starting out. Take that as a sign to change your process and rework your numbers, or use it as a starting point to figure out what kinds of financing would be most helpful.   

Learn About Different Financing Options

Knowing your numbers increases your chances for good business financing. However, knowing what financing options are available is just as important!

Small Business Administration (SBA) Loans: SBA loans are the most common business loans for small businesses. These loans are backed by the Small Business Administration and can help get your small business off the ground faster. These loans are especially helpful for one-time big costs and can be used for just about anything for your business.

Small business loans can also help you during the formation of your company. Lenders that offer startup business loans are harder to find, but SBA loans can be used the same way!

If you need small business loans for startups or other business loans for small businesses, start by looking at sba.gov for more information.

Business Lines of Credit: Where a business loan is often more helpful for larger purchases, finding a business line of credit lender might be more helpful for assistance covering day-to-day costs.

Your business line of credit will likely be dictated by the size of your business. Think of a line of business credit like you would a credit card. A small business line of credit will be lower than that for a large business, as the credit limit is determined by your history of paying it back.

Commercial Financing for Real Estate: If you’re just looking for a new building for your business, there are plenty of commercial financing options! Commercial real estate is a very important part of your business, so it’s good to know what goes into those loans.

Commercial real estate loan rates take the type and location of the property into account, as well as some of the more usual business lending factors. Finding a good real estate loan can help keep your monthly business expenses down.  

There are more options for business lending, and each one offers unique benefits. Each business has different lending needs, and most business lenders are able to help you find the products and services that you need to keep your business financially healthy.  

Business Lending from Bank of New Hampshire

At Bank of New Hampshire, we know how important it is for businesses to have access to the funding they need. If you don’t know your numbers, don’t worry! You can schedule an appointment with our business lending team. They’re here to understand your business and find the financing that meets your needs.

Not only do we have a qualified team, they’re also award-winning! Bank of New Hampshire has been a proud honoree of the NH Business Review’s Best of Business Awards. That’s 12 years of business banking excellence, ready to help you find the best business financing possible.

Ready to learn more? Check out our business lending services!