Access to capital is important to a small business. Many small businesses are undercapitalized and need additional cash to expand operation, upgrade equipment or engage in research and development. More often than not the entrepreneurs funds are tied up in assets that are not particularly liquid. Ready cash is usually is short supply. Banks are a reliable source of funding for small businesses. SBA-guaranteed loans and commercial bank loans are available to help both the start-up business and the small business that needs more capital to succeed.

Generally, loan officers require the most information from a first-time borrower. Banks may offer an unsecured loan, although that is less likely. Unsecured loans are made based upon assets, credit history and ability to repay. However, these loans do not require you to personally secure the loan with personal or business collateral. The more common secured loan requires that you guarantee your willingness and ability to repay the debt with an asset such as real estate, stocks or securities. Loan packages become more detailed as the size of the loan increases or the length of the repayment timetable is extended.

As part of a loan application you will generally be required to provide: a business plan, a resume, a credit history with references and specific loan documents required by the bank. For both new and existing businesses, banks will want to know your level of education and practical business experience; management experience is something the loan officer will look for in your work history. In addition, the bank will review your personal credit history.

For existing businesses, the credit history and an accounts payable balance sheet may be requested. A business plan is typically requested by the loan officer. The business plan should clearly describe the business, its goals and objectives, as well as the financial details supporting the tangible goals set for the business. A well-conceived and thorough business plan will have an impact on the bank’s perception of your commitment to the business and its financial success.

If you would like to discuss loan application processes, building a loan request package or preparing a business plan, contact the SCORE® Association (Service Corps of Retired Executives). SCORE® is a nonprofit association dedicated to the success and growth of small business. More than 12,000 volunteer, business counselors donate their time and expertise to assist entrepreneurs free of charge. SCORE® also offers a free business planning workbook, "How To Really Start Your Own Business," to anyone who plans to participate in at least three counseling sessions on developing a business plan. For a referral to the SCORE® chapter nearest you, call 1 (800) 634-0245.