Lending for startups – What you need to ask and know


Getting a bank loan for a brand new business should be straightforward if you approach it the right way

You have a brilliant startup idea that you are certain will become a thriving business. The trouble is you need money to fund it. You need to sell your bank manager your dream to get your first business bank loan secured.

For many new entrepreneurs, the lending process can be daunting. But it shouldn’t be hard. There are many ways to streamline it to achieve the successful outcome you want.


You need to start by shopping around. It’s important to remember that while you want a bank to help you, you are a customer who deserves the best advice and service.


Small Business Smart Business program coordinator Liz Grant says asking a variety of businesses in your local area and industry can help you get an objective view on what each bank can offer. Grant says finding a bank that can offer a consistent contact for you is important.


“If you’ve got a bank with a business banker changing every month and you have a business where you need a really strong relationship with a business banker over a period of time, that [bank] might not be the right one for you,” she says. “Once you’ve got a short list, go and see the banks. Don’t think you need to restrict yourself to just one, in terms of just having a conversation.”


Once you have narrowed it down and make an appointment with a lender, it’s crucial to arrive prepared with all the information they’re likely to ask for.


Grant explains that this includes a business plan, a financial outlook and strong market research for your idea. Your business plan should motivate a lender or investor to finance your business and needs to include your current income, net profit, and expenditure and future projections.


“You need to have a clear business plan that shows realistic goals and actions to get them. You then need to show that you have a network of advisors to support you.


“Remember, you’re asking for money, you’re selling them the concept of a business you want to start, and if they don’t buy it [your idea], they’re not lending,” Grant says.


TheBankDoctor founder Neil Slonim agrees that as a startup you must be willing to invest time and effort in “educating” the bankers about your business.


“The risks involved in giving up on this time consuming and at times frustrating task are significant,” he explains.


Banks will want you to fulfill what is known as the ‘three Cs’ – character, cash flow and collateral.


This means that they’ll also want to know if you are personally skilled and experienced enough to make your business a success.


Grant says banks will always look at the background of the senior managers of the company and ask if they have run a business before and if they were successful. They could be looking for some experience in leadership or perhaps responsibility in a corporate role.


“The reason they look at experience is because it’s an indicator of mindset,” Grant says.


It is also important to be open to the bank manager’s suggestions during the initial meeting.


“If they say to you, I think for this business you really need a business mentor, don’t shut down their suggestion. Instead, ask who they might suggest and the other key thing is to ask lots of questions during the meeting.”


Once you have signed onto a loan, Slonin says keeping up communication is vital.


“Bankers don’t like surprises. Ignore your bank at your peril. Better to under promise than over promise. Keep communication channels open and make sure your bank knows what you and your business are all about.”


It is clear that putting in the prep-work before you approach your lender will dramatically increase your chances of walking away with your startup loan.


Written by: Nicola Trotman


This article is sponsored by Australia and New Zealand Banking Group Limited ABN 11 005 357 522 (ANZ).

Success starts here

If you’re thinking of starting a small business, or have recently launched one, you want to do everything you can to ensure its success. Visit the $2 Billion Lending Pledge to find your local ANZ Small Business Specialist and get an indication of how much you could borrow.


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