Fujii, formerly of Bank of Hawaii, and a National SBA Small Business
Advocate of the Year offers these insights into what the bank looks for
in a business in order to make the decision to grant a loan. Key points
What type of industry are you involved with?
Is it new, emerging or
Is it dependent upon other
Factors that impact the
business risk, such as management experience, depth and integrity.
How long has the business been in existence? Also, include market
share, size, product line (supply,
sales, and distribution), and
profile of customers.
What is the
legal form of the business? Is it a partnership, proprietorship,
corporation (what type),
joint venture, etc.?
management. What type of experience does the
management team have with this specific industry, and what is
the commitment? Are the owners involved directly with the business
or are they absentee owners? What assets or liabilities are involved
with the business? How does management take out their
What facilities are used
and where are they located? What are the terms of the lease? How
does it compare to competitors' facilities? What are the capital
expenditures, insurance coverage, etc.?
Existing financing. Do you
presently owe trade suppliers, other banks, principal shareholders,
relatives, and others?
Who are your sources of
suppliers, including history and discounts?
What are your existing
loan arrangements, bank relationships, borrowing/repayment history,
Provide a financial
analysis, which includes accounts receivable/payable, credit policy,
collections/bad debt experiences, and conditions of inventory. Are
your taxes current? How is the company capitalized compared with the
industry? What are your
marketing plans, sales projections?
balance sheets, income statements, expenses vs. sales,
operating profit margin, asset management, liability management,
cash flow summaries, and projections and sensitivity analysis.
ability to answer the above questions, you help the bank answer the most