Entrepreneurs spend plenty of time complaining about bankers. A common rap is "Lenders don't understand my business." Ironically, the same can be said about company owners: few make any serious effort to figure out how banks operate, even though bankers wield enormous influence over the company owners' lives.
If you'd like to bone up on how banks operate -- and in the process, enhance your ability to borrow the money you need -- one excellent place to start is Bryan E. Milling's How to Get a Loan or Line of Credit for Your Business (Sourcebooks, Naperville, Ill., 1993, $8.95). Milling, a lender himself, takes you through the basics of business banking. Among other things, you'll learn about what goes into a financial forecast, how bankers look at credit and collateral, and how nonfinancial criteria (such as experience or management ability) can tip the balance in your favor.
You'll also get some valuable pointers on selecting the right bank loan, applying for loans guaranteed by the Small Business Administration, and understanding the sorts of legal documentation you can expect as a borrower.
Of course, there's a limit to how much depth any book can deliver in 145 pages, but Milling offers both information and insight in his readable volume. For instance, in one of the more interesting chapters, "What Makes Bankers Conservative," he notes that banks operate on thin margins of error. "An incorrect lending decision once out of a hundred times," he writes, "erases the profit from ninety-nine correct decisions." Milling may not get you to like bankers any better, but he'll certainly help you to understand them.* * *
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