Suggestions from Banks in Michigan
Whether your business was essential during the COVID-19 shutdowns or temporarily closed, you may need additional funding to fuel success or offset slower demand as the economy reopens. Business loans from Michigan banks may be available to purchase inventory or equipment or to jump-start working capital. Depending on the terms of your loan, you can use funds to rent space, hire staff, or buy supplies.
Lending teams at banks in Detroit, Ann Arbor, and Grand Rapids will evaluate the following aspects of your business during the approval process:
- Your Credit History. The loan officer will run your credit reports to assess how well you’ve repaid prior loans and see how much debt you currently carry. These two metrics give the lending team insight into your capacity to repay a loan.
- Your Business Cashflow. Cashflow shows a lender how much money your business generates to help pay back a loan. Your cash flow position is also an indicator of the health of your company. Part of the review process includes calculating your debt to income ratio. Although the target ratio may vary by situation, a favorable ratio will be 1.20x or higher, meaning you have $1.20 of income to cover each $1.00 of debt.
- The Collateral You Have to Secure the Loan. Even companies with a strong credit history and a healthy cash flow can run into unexpected situations like COVID-19 that create repayment challenges. Lending teams at banks in Michigan will review your business assets such as real estate, equipment, vehicles, inventory, or accounts receivable for collateral if you’re unable to repay your loan.
- Your Financial Documentation. Records such as tax returns, bank statements, loan agreements, and balance sheets are some of the sources commercial lenders need to evaluate points 2 and 3 above. Having an organized file of these documents as well as legal paperwork such as business licenses, franchise agreements, lease agreements, or patents will help the team during the loan approval process.
- Your Business Plan. Before giving you funds, your lender wants to be confident that you have a plan for success. A solid business plan explains your vision for your company and a set of strategies and tactics for achieving your financial goals. At a minimum, your outline should include the following details:
- A description of your company
- An explanation of the product or service you’re selling
- An overview of your management team
- An analysis of your industry including size, projected growth, and number of competitors
- Your plan for your facility and operations
- Your go-to-market tactics including promotions, marketing, and sales programs
- A SWOT analysis that explains your company’s strengths, weaknesses, opportunities, and threats
Here’s a business plan template to help you get started.
Why Choose Level One Bank for Your Business Loan
As a top-rated community bank in Michigan, Level One Bank brings local knowledge and business acumen to our first meeting with you. You’ll benefit from:
- our passionate commitment to helping Michigan’s economy grow
- our personal, customized approach to crafting a financing plan that aligns with your business needs
- a lending team with deep skillsets and an entrepreneurial spirit
- local underwriting and local decision-making – no out-of-state lending committees who may not understand how business works in Michigan
Contact our team for more information about business loans or to set up a time to meet. We’re here to help you succeed.
“I'm all in favor of banks that play their part in community endeavors, private individuals looking for loans, people who want to start up a little business, and that's what banks are for.” — Ian Anderson
All loans are subject to credit approval.