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Starting a New Business? It's Never Too Soon...

By Marshall Jones

If you are considering opening a business or have started a business, now may be the time to begin building a solid bank relationship. This process is fairly easy. You can start by opening a Business Checking Account.

You may ask, “What is a bank relationship?” It is simply becoming known to a bank and its personnel through using the bank’s services-checking, loans, and savings, etc.

After the initial step of opening a Business Checking Account you may want to approach one of the banks loan officers about obtaining a small business loan. At this point you would inquire about a loan for a specific purpose related to your business. You may request a loan to help acquire inventory or pay for business expenses, etc.

The loan officer will discuss your need for a loan and ask you to complete a loan application. He/she will also explain the steps necessary to obtain the loan. This may include how the bank goes through the process of approval, credit checks, the use of personal guarantees, re-payment methods, etc. Your responsibility will be to thoroughly complete the application and furnish additional requested information.

The bank may approve the loan without special requirements, or they may want you to sign a Personal Guarantee. A Personal Guarantee normally states that you will repay the loan even if your business cannot. Additionally, the bank may require that certain of your personal assets be pledged. A list of these assets becomes collateral for the loan and is made a part of the Personal Guarantee.

The securing of this loan and its timely repayment gives you and your business much needed credibility with the bank. The timely repayment of this loan also serves to show the bank and other creditors that you are a serious business person who should be be considered for larger loans and other bank support as the need arises.