Small-Business Loans: Still on Offer

By Sharon McLoone

Small businesses, the backbone of the U.S. economy, have found it difficult to get a bank loan these days. But it's not impossible.

Gone are the days when just about any business could get a loan for under $100,000 with simply a strong credit score, says Jordan Peterson, a senior vice president at PNC Bank in Pittsburgh. While credit scores are still king, today you need more to prove you're a sustainable, viable business. Banks will review an applicant's tax returns for the past few years and want to know industry trends.

"Banks have always underwritten on cash flow, but even more they're looking at sustainable cash flow and if it's going to be sufficient to pay back the loan," says Peterson.

Here's some advice from the experts to ensure your small business loan application stands out:

1. Work with an accountant: Peterson, who has worked in the commercial loan business for 23 years, says that although banks will accept tax returns, it can help a small-business owner to work with an accountant to help prepare his or her financial position to show good, detailed records to a bank.

2. Work with a business banker: Get to know and really work with a small-business banker. The banker can help an applicant work through the process. Peterson notes that PNC Bank's small business loan applications are electronic, but that doesn't mean a business owner can't meet with a banker in person to help explain the application.

3. Beef up your business plan: Presenting a business plan is important for some loan applications, particularly those that are financially guaranteed by the Small Business Administration. It's important to acknowledge the history of your company in the plan, too.