When it comes to small business, the idea of building something from nothing has a certain romantic appeal. But in reality, it takes more than strong ideas, hard work and enthusiasm to get a new project off the ground, or keep an existing one going strong.

Without the capital to back it up, even the most brilliant business plan is merely theoretical. The average would-be business owner doesn’t have that kind of cash on hand, so they turn to a commercial lender to secure the necessary funds.

As a proud supporter of local businesses, Lee Bank’s Commercial Lending arm works with start-ups and established businesses to determine needs, assess risks and manage the finer details of commercial borrowing.

“Lee Bank considers its role as a community banking partner and our support for community businesses as one of the most important things we do,” wrote Dave Harrington, Vice President of Commercial Lending. “A Lee Bank commercial loan is really an investment in a business to help fund a particular need, whether you’re purchasing an operating facility, new business equipment, or creating additional working capital to grow inventory.”

First steps

Securing a commercial loan comes with a few more steps than opening a new credit card or taking out a mortgage. The approval process involves not only assessing your own credit history and financial situation, but also the soundness of your business plan and how you intend to spend the money borrowed.

“The process of securing a home mortgage or personal loan involves looking primarily at the individual applicant’s income, credit, and loan collateral. The process of securing a commercial loan also considers the business’ financial condition, management ability of the owner, the industry, and the competition within the market, to name a few business-specific factors,” wrote Vice President of Commercial Lending, Chris Kinne.

“It can sound intimidating, but some loans are funded the same day a borrower applies or take only a few days to finalize. Others may take longer if a review of environmental reports and appraisals are needed. In all circumstances, we work hard to streamline the process for our borrowers,” he explained.

To start, the Lee Bank team recommends making sure your personal credit is in order.

“The first thing to do is to monitor your credit history and make sure that it correctly reflects your payment record,” wrote Kevin Bisaccio, Vice President of Commercial Lending. “There are several credit bureaus that can help you with that. A positive payment history is a very important foundation for any future debt.”

Once you’re confident your own credit is in good shape, attention should go to gathering records and data for your business. The more information you can provide, the easier it will be for the lender to determine if they can provide what you’re looking for.

“As you prepare to apply for a commercial loan it is important to gather certain financial documents including business tax returns and income statements, and a current balance sheet. These will give the bank a good picture of the business’ ability to repay the loan you’re requesting,” Bisaccio wrote. “All businesses, and particularly start-up businesses, should prepare a projection of future income, expenses, and a business and marketing plan. Additionally, the business owner should have his/her personal tax returns available as well as a list of personal assets and liabilities to give the bank a broader picture of the overall credit.”

While the approval process for a commercial loan is a thorough one, the Lee Bank team stressed that their ultimate goal is to help local business owners, and the larger community. “The bottom line though, as we see it, is that Lee Bank remains a true Community Bank and an integral part of Main Street and the towns we do business in, and we want to reinvest dollars back into the community to help create local jobs and services,” Kinne wrote.

Continuing success

Commercial loans, Harrington noted, are not a blank check. “The intent is to help add value in the business, so there can be some limitations on how business loans are used,” he wrote. “For example, if a loan is obtained to help improve your operating facility, there may be controls built into the loan to ensure that’s exactly where loan proceeds go.”

Lee Bank’s Commercial Lending experts can help business owners figure out the best use of their money before they take out a loan.

“Lee Bank Commercial Lenders are happy to meet with any potential borrower seeking to buy a specific business. We can assist with reviewing historical cash flow figures, forecasting future cash flow, and suggest a loan structure based on the supporting numbers and collateral,” wrote Mark McKenna, Vice President of Commercial Lending. “For those who plan to start a new business, the Massachusetts Small Business Development Center in Pittsfield is a great resource for putting together a business plan that can then be presented to the bank for further consultation.”

Once the loan is granted, Lee Bank continues to support its commercial customers with a range of additional services to manage the financial complexities of running a business.

“We have multiple checking account options to help manage operating funds as well as interest-bearing savings, money market and CD accounts,” Bisaccio wrote. “Lee Bank’s Business Online Banking and Mobile Banking services let you bank wherever you are, 24 hours per day, and include bill payment and remote check deposit. Lee Bank offers retirement planning for business owners and employees, and business succession planning to address a business owner’s long-term needs.”

Other specialty services available include municipal accounts, attorney IOLTA accounts, landlord-tenant accounts, and merchant services.

Whether you’re looking to take the plunge into business ownership, or you’re seeking new capital to freshen up your existing operation, the Commercial Lending team at Lee Bank delivers borrowing options with a local perspective. To explore all that Lee Bank has to offer to its commercial clients, visit leebank.com/business/business-loans.

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