Small-Business Loans: Still on Offer

Ken Klotz, director of the Illinois Small Business Development Center housed at Bradley University, says a business plan needs to contain growth ideas, new ways to reach an existing market, an additional market that hasn't been tried before or a new product or service.

4. Explain yourself: Don't just fill out the demographics on a loan application, but give a good explanation about your business.

"If sales dropped 10% from 2007 to 2008, explain why that happened," says Peterson. "Maybe it's because your business exited a big customer because it wasn't paying on time or maybe the industry is down but has stabilized." If you don't explain what happened, you leave it up to the interpretation of the bankers, and they usually assume that the drop will continue. If writing isn't your strong suit, there are many free business counselors available to help you.

5. Know your industry: Let the bank know that whatever industry you're in, you're the best in the business. "You want to be able to explain why you're doing fine," he says. For example, many contractors are suffering because construction is down but there are those who serve a niche, or those due for stimulus package funds, that are growing healthily.

6. Know your region: Banks like to review data that show industry norms by area of the country. Klotz finds the main data source for that is the Risk Management Association, an organization with bank members. It gathers anonymous financial statements of bank borrowers and averages them by industry both nationally and regionally. It's not data that can be easily found and understood just by a quick Internet search, says Klotz. Small business development centers, SCORE offices and large libraries have access to the data as do other firms for a fee.