Generating capital for your new business.

As an entrepreneur, you will have to confront the realities of financing a new-business concept. But if you have the proper know-how, you can get the funds you need--and on the terms you prescribe.

Tips on Forming a Banking Relationship

If you haven't been able to form a relationship with a bank before applying for a business loan, investigate the bank you've chosen. Call up and make an appointment with a loan officer. Tell him or her that you are thinking of seeking financing through their institution and you would like to know more about them. While you're there don't be afraid to talk to the bank president and manager, as well as the loan officer--if you can--to get a feel for their operations and their treatment of smaller customers.

Describe your credit needs, ask what the bank can do for you, and try to determine whether others in your field are among their customers. Make sure your banker understands your business--at least to some degree--and "talks your language." Before leaving the bank, get some literature, if you can, on the different types of loans available. Learn about the bank's security requirements for these and other types of loans, and decide which you want to apply for.

When you've picked your lender, call up and make another appointment, this time to apply for the loan. Plan for a long, thorough meeting. Earlier we discussed the preparation of your business plan, including a detailed estimate of the amount of money you need, and a personal financial statement. Take these documents with you. Also prepare a one-page summary, including what the money is to be used for and how you plan to pay it back. Bankers love facts and numbers, so have lots of both. And do your homework to be prepared to answer any questions. If you like, take your accountant or lawyer with you, but plan to do most of the talking yourself.

Andrea Sandor is a freelance business and finance writer based in Van Nuys.