How to build your banking relationships.

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Applying for a loan, like any major business decision, requires preparation and an understanding of how to make the banking relationship grow. Here are some tips from a professional, Brett N Silvers, chairman and CEO of First International Bank. This is an edited version of an article that originally appeared in the NTMA's Record:

Make your request specific in terms of the amount, term and/or purpose of the loan. Banks cannot begin to consider a loan until they know the specifics. Until the borrower's request is defined in a business context with information on what the loan will be used for and the borrowers anticipated repayment terms, financial institutions have no way to respond.

Have your financial information prepared by a reputable independent accountant. Lending institutions look for information prepared by a professional who is certified by, or an affiliate of, the American Institute of Certified Public Accountants or a reputable international accounting consortium.

Understand the scope and purpose of bank financing. Banks lend money to facilitate the activities of businesses with a track record and generally do not provide equity to startup businesses or to 'marginally capitalized companies. Banks 'are not venture capitalists. They participate in 100% of the downside risk, but their upside is limited to interest rate spread and related transaction fees.

Be prepared to be personally responsible for a loan. This' should include disclosing personal financial information and, usually, personally guaranteeing the loan. People should be prepared to stand behind their businesses if they expect a financial institution to do the same.

View the banker as another source of professional guidance and information, such as lawyers and accountants. Don't view bankers as adversaries. The expertise that banks bring to the table is valuable intellectual capital that can help you grow your business.

Be prepared to assume the cost of an appraisal and environmental study when industrial real estate is used as collateral. When real estate is primary or secondary collateral for business loans, bank regulators require information About the realistic value and environmental risks of real estate that stands behind their loans. Generally, the aggregate cost of a commercial real estate appraisal and environmental study is in the range of $5000...

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