5 Steps to Get Approved for Small Business Loans


Can you tell a good story? Maybe not. At least, you may not think you can. Most of us, though, naturally tell stories about ourselves. And that’s what your lender wants to hear. The five steps to get approved for a small business loan are also the five parts of a good business story.

You need to learn how to tell a tale to your banker.

Obviously, stories can be entertaining. But storytelling is also an effective method of organizing information. A good business story is engaging, persuasive, and anchored in facts. It places the data about your business in the context of your larger business purpose.

You probably know the gist of how a story is organized. There’s a main character who wants something and acts to get it. He or she faces obstacles and, in the end, either reaches the goal or fails to reach it. That’s the basic outline of most stories.

You can use this scheme to present your business and its goals. Describe your firm and its funding needs in the context of your overarching objectives and challenges.

For a relationship bank, it’s both useful and rewarding to listen to clients’ stories. Your story provides the data your banker needs to know and shows the human value of your business. It grounds your numbers in a real-world scenario of goal-driven action. It shows your lender why you do what you do, and the tangible ways your business serves people.

Your story helps your banker become a partner who’s eager to invest in you.

To get qualified for a small business loan, tell your banker a good story. Here are the 5 parts of a story that tells your lender what they need to know:

  • Who? The audience. You need to tell your story to the right lender.
  • What? The business. Describe what you do and provide the necessary data.
  • Why? The need. What you want to achieve and what obstacles you face.
  • How? The loan. The way you plan to achieve your goal.
  • When? The timing. When you need the loan and when you can pay it back.


Talk with a business lender

How to Tell Stories to Bankers

  1. Who?: Find the kind of lender who wants to hear your story.

    Start by finding the right audience. A large, national bank is less likely to be invested in your story than a local bank that’s focused on building personal relationships. The business model of a national or multi-national bank requires a commoditized approach.  

    Instead, find a bank with a consultative approach. A lender that wants to help you think through options and find the right solutions will care about your story. Local lenders who build relationships with business owners, like Flagship Bank, aren’t just focused on your numbers. They want to partner with businesses who make a difference.
    A knowledgeable, accessible lender can actually help you tell your story better. They know the right questions to ask and have helped other businesses handle plot twists you may not foresee. Preparing to tell your story means preparing for a conversation.

  2. What?: Prepare a thorough description of your business.

    Your business is the main character of the story. The audience will want to know all about it. That’s why you need to present all the significant details.

    You’ll need to provide a summary of your business’ history that describes the following:

    • How and when your company was founded
    • Your reasons for getting into the industry
    • The specific products or services you provide
    • The ownership structure
    • The principals and their experience

    You’ll also provide financial information. This shows your lender your company’s past performance and its current direction. Include the following:

    • Both business and personal tax returns
    • A current income statement and balance sheet
    • Personal financial statements of the principals
    • Sales concentration, accounts payable, and accounts receivable reports
    • Purchase agreement or invoice for equipment or real estate purchase

    If your business is relatively new, check your personal credit. Your lender will lean more on this. Be prepared to discuss any previous management experience. Also, know what collateral you have to offer.

    Detailed information about every aspect of your business provides your lender with necessary data. It also shows your professionalism, which helps build trust.

    By offering a clear, thorough description of your business—the main character of the story—you help your lender understand the goals your business is pursuing. It shows why your business need makes sense.

  3. Why?: Be ready to clearly explain your specific business need.

    Your lender wants to know the specific reason you need a loan and the place of this need in the larger story. How will it move your business toward fulfilling its purpose and potential?

    Your current business need is a scene in a larger plot.

    Are you buying a warehouse? New forklifts? Bigger, more energy-efficient refrigerators? Do you need ongoing cash flow stability for your daily operations? Explain specifically what you need and why you need it. Describe what’s at stake:

    • What can you gain and who can you better serve through meeting this need?
    • What obstacles are in your way?
    • How will this specific loan request enable you to overcome those challenges?
    • What role does this need play in the larger story of your business and its goals?
  5. How?: Know what kind of loan best fits with your business’ need.

    After describing your business need, explain what will help you accomplish this task.

    Be informed. The more you know, the smoother and more constructive the approval process will be. Here are some common types of small business loans:

    A relationship bank will work with you to find the best fit, and the right lender will even be able to create custom loans.

  6. When?: Know when you need the loan and when you’ll be able to repay it.

    Time provides a story with its frame. Action unfolds in time. The role financing plays in your business’ story is intertwined with this “time-frame.”

    Tell your lender whether you need funds right away, in six months, or intermittently over time as needs arise. Use your financial statements and the return-on-investment you expect from your loan to show your lender how you plan to repay it and over what period of time.

It’s time to move the plot forward

Minnesota’s robust small business culture helps make it a great place to live. Flagship is a local, relationship bank because we want to support the creative entrepreneurs who make our lives and communities better. Our business is all about helping you overcome obstacles and achieve your goals.

That’s why we love hearing our clients’ stories. We’d love to hear yours. Contact us today.

We want to see you succeed. We want to help you move the plot forward in your business’ story. That’s why we’re investing in you.


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