Clear a Path to a Successful Pet Care Business Loan

Schwanda Flowers
What are some of the things you can do to make it easier for your lender to assess your business loan application? Managing Director of First Financial Bank’s Professional Services Division, Schwanda Flowers, Pharm D, provides some insights into how to remove roadblocks and smooth the path for evaluating your first pet-oriented business loan request.

Applying for your first business loan to open that pet care business? Our team here at First Financial Bank has been in your shoes. Many of us have previously owned our own businesses before joining the FFB team to work with people like you, so we know just how nerve-wracking it can be to apply for your first business loan.

We get asked often “How can I speed up the loan process?” Well, you can’t actually speed it up but you can avoid slowing it down by planning ahead – and taking advantage of some of the tips below:

1. Build a Business Plan

If you haven’t created a business plan yet, you’ll want to get started right away. This is a good opportunity to pull together the details you’ll need to share with you lender and/or any potential partners. This document lays out the information about the:

  • Type of pet business you are planning to start or buy. Indicate if this is going to be a product or service-oriented business, or both.
  • Business opportunity, including market potential for any identified location and your type of business.
  • Leadership team you have assembled as partners and/or advisors. For partners, your lender will review each of their credit reports and information about their financial contribution.
  • Financial summary and details for you and your partners. This includes how much you need to finance and your plans for growth. And don’t forget to include what you plan to pay yourselves as part of the plan.

Need help putting your plan together? Check out our free, downloadable: “A Guide to Building a Business Plan for Your Pet Care Business”.

2. Know Your Credit Score and Report Details Ahead of Time

When you apply for a loan, the lender will check your credit score and review the details on your credit report. Before you apply for a loan, you should know what the three major credit bureaus (Experian, Equifax and TransUnion) are reporting about your creditworthiness: You are entitled to a free credit report from each agency every year. That way if there are errors on a report (it can happen) you have time to work through the appropriate process to get the report amended before the lender requests a copy.

3. Have Down Payment in Place 60 Days in Advance

Typically, you’ll need to provide at least a 10% down payment. What you may not know is that money must be in your account for at least 60 days prior to the loan. And the lender must be able to identify the source of that money. It’s not unusual for people to get a gift from someone close to them for some or all of that down payment. But it can’t be a loan. If you are getting a cash injection from a personal source, please make sure that it is paid via a traceable source (electronic funds transfer from their bank or a check). If you are liquidating an asset, again, you want the funds issued and deposited in a manner that can be identified. In this one case, cash is not king.

4. Keep an Up-to-Date Personal Financial Statement

With your loan application, you’ll need to provide an accurate, up-to-date personal financial statement. The template is available here from the U.S. Small Business Administration (SBA). As you look to become a business owner (or grow a business), you should know your net worth. Take your time to be sure the information is accurate. Math errors or other discrepancies can impede your plans to acquire a business loan.

5. Establish Your Trusted Team of Advisors Early

Do you have an attorney? An accountant? What about an insurance broker/agent? These are people with the skills and expertise you will need on your team of “trusted advisors”. These are the people who can help you complete the steps and documentation you need for the loan process. More importantly, provide you with the insights to help you in navigating the challenges of running that business successfully, along with your lending partner. Establish these relationships early before you need them to respond to requests on your behalf. The good ones are busy professionals and will need time to provide what is required.

6. Start at least 90 Days in Advance to Assign Life Insurance to Bank

Depending on the type of business you are planning to buy or build, you’ll need a variety of insurances. Having a good insurance professional in your team of trusted advisors can save you a lot of headaches. For an SBA loan, you’ll need to assign your life insurance benefits to the bank (this is not the same as making them a beneficiary). This can take a bit of time, so start at least 90 days in advance with your insurance agent. Having this settled well in advance will avoid it slowing down the processing of your loan.

7. Know the Current Value of the Business

The bank will have a business appraisal and valuation completed as part of the loan process, but you should have your own done prior to applying. This way you’ll know the real value and what is realistic for a loan amount. You’ll want to be able to break out the numbers for the business assets vs the real estate.

8. Tell a Complete Story

There will be a lot of numbers and documents that you will need to share as part of applying for a business loan for your new pet-oriented business. Work with your advisors and lender to create a checklist of documents and materials that you will need. And don’t forget to include your story – what is the driving force behind your plans? Why are you opening this type of business? Where do you see it going? Help them see your vision.

Smoothing the Way

With a plan, good preparation and insightful advice from your trusted advisors, you can optimize the path to processing your loan.

Need some help building your pet care business plan? Find a guide here. Want to chat about your plans with our lending team? Let’s talk!

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