A business loan can be a powerful tool for a new venture working to get off the ground, or for an established company with sights set on growth. But understanding the best way to approach the application process — and how to determine your company’s proper fit — can be complex. Central Bank is here to help.

The following business loan guide offers insights to help you make a more informed decision regarding financing. Read on for guidance regarding everything from the types of business loans available to what to expect throughout the application process and the ways your local bank supports your journey.

Understanding Your Available Business Loan Options
There are countless paths available as it relates to business loan options, and each approach can be tailored to suit your company’s individual needs and circumstances. Here are some of the more common business loan options you’re likely to come across in your search.

• Commercial and Industrial (C&I) Loans: Business lending designed to help companies cover hefty expenditures such as vehicle, property or heavy equipment purchases. Such loans often require quality credit and a strong financial history.

• Equipment Financing: Loans used to purchase machinery, technology, office furniture and other equipment essential for everyday business. The equipment itself often serves as the loan’s collateral.

• Interim Construction Financing: Short-term loans that cover costs associated with purchasing, constructing and completing a property before it sells. This is a common lending option for developers and companies that support property development.

• Professional Financing: Lending tailored to working professionals such as attorneys, veterinarians and doctors. Professional financing helps cover costs associated with equipment, expansion or everyday operations — and is especially useful for those whose debt associated with their educational training makes traditional lending challenging.

• SBA 7(a) Loans: Government-backed financing which can be used in a number of ways, such as supply purchases, business debt refinancing and working capital. Lower interest rates and longer repayment options are common with SBA loans, although adequate documentation is required.

• Working Capital Lines of Credit: Short-term loans that provide flexible access to funding. Lines of credit allow businesses to borrow funds, pay them back and borrow again when needs call for it, and are especially useful when unexpected expenses arise.

Interested in learning more about your available business loan options? Our What Every Business Should Know About Commercial Loans blog post delves further into the various types of financing and factors to consider when looking for your company’s appropriate path forward.

Preparing for the Loan Application Process
Selecting the right type of business loan is just the first step of your financing journey. As you continue into the official loan application process, you should be prepared to present your potential lender with a clear picture of your business objectives and financial health. Here is some of the documentation you’ll want to gather.

• Business Plan: What will (or does) your company offer? How do you plan to use your loan? What sort of revenue do you project bringing in over the next six months, year or more? Lay out your plans in a clear, concise manner.

• Financial Information: Pull together profit and loss data, cash flow statements and balance sheets from recent years. This helps your potential lender better understand your financial health and how you go about managing your money. In addition to reviewing such data, your lender will likely perform a credit check.

• Tax Returns: Bring business and personal tax returns with you — from at least the past two years.

• Business Filings: Gather any information that might help your potential lender research your business. This includes, but is not limited to, articles of incorporation, your employer identification number (EIN) and applicable licenses or permits.

• Collateral Details: If your potential loan requires you to put up collateral, offer information regarding the assets you plan to include.

Remember, the loan application process is meant to be a conversation. While the above documents are important, your loan officer will want to discuss your plans further — not only to ensure your chosen financing path is the right one for you, but to better gauge your ability to repay the loan. Let’s cover some of the questions you should be prepared to address during that meeting.

• What are your monthly expenses? Revenue? Profit margins?

• What sort of risk management plan and business insurance do you have in place to protect your investment?

• What are your plans for the loan — and how will it impact growth?

• How do you plan to pay the loan back?

• What would your plan be in the event that unexpected expenses or a slow month made it difficult to make a loan payment?

• Can you provide references?

Just as no two businesses are alike, every loan application process is unique. If you’d like more information about what the business loan application process looks like and how to ensure you’re prepared, our How to Apply for a Small Business Loan blog post is a great resource.

How Your Local Bank Can Help Support Financing Success
Applying for a business loan can feel overwhelming, but it’s important to remember you aren’t in this alone. Although your lender is asking many questions and requesting extensive documentation, their goal is to help bring your business vision to reality. Here, we’ll discuss the unique benefits local banks such as Central Bank can bring to the process.

• Quick, Local Lending Decisions: Unlike large corporate banks that funnel financing decisions through far-off headquarters, most local banks’ decision-makers are right there in town. This enables quicker turnaround times and allows professionals to factor the region’s economy, market conditions and related considerations into their decision.

• Flexible Options with Less Red Tape: Smaller banks’ more streamlined practices mean fewer hurdles for borrowers to overcome. In addition, their ability to offer more personalized service often results in lending better tailored to a unique business and its needs.

• Emphasis on Long-Term Relationships: Local banks such as Central Bank aim to serve as a meaningful part of the community they call home. That means contributing to hometown causes, employing locals and maintaining lasting relationships with customers. Ideally, the same person who helps you obtain your business loan will be able to answer any questions you have in the future — and can go on to help you with additional financing needs as your business continues to evolve.

Securing the right small business loan can go a long way toward helping you bring your vision to life — and it doesn’t have to be complicated. By approaching the process with the right team at your side, and with the right information prepared, you can take confident steps toward securing critical funding.

If you have questions about any of the above, or if you’re interested in sitting down with one of Central Bank’s lending experts, reach out at any time. Our team takes pride in helping business success take shape for our Houston friends and neighbors, and we look forward to working with you!