Need Money to Start a Small Business?

By Bruce Freeman On Mar 1, 2023

Dear NJ Small Business Advisor,

Q: I want to open a hair salon in town and need a loan of $50,000 to set up operations. What steps do I need to take before approaching a lender?

A: Approximately 8,000 small business loan applications are rejected every business day across the nation. There are many factors that can result in a turndown notice.

Luis De La Hoz, first vice president, regional director community lending New Jersey at Valley Bank, offers the following advice to entrepreneurs seeking business financing for the first time:

• Provide a strong credit history;
• Present a business plan;
• Prove that you are able to generate enough cash flow from customers to cover fixed and variable expenses;
• Have a good personal relationship with a financial institution (your banker could be a cheerleader for your business);
• Understand the amount of money you need and your capacity to repay the loan;
• Be able to describe your story and vision of the business to your lender;
• Prepare needed documents including your bank account information (from the bank from which you are applying for a loan) and other information such as:
  • State certificate information
  • A signed application
  • Business customer information
  • Business account profile
  • Customer photo ID
  • Form 4506T (a request for transcript of tax return)

De La Hoz says that it is important to maintain good communications with your banker, adding that banks exist to help businesses expand. He also mentions that entrepreneurs may want to seek alternative funding sources, such as US Small Business Administration loans (of which Valley is a program participant); county and municipal grants; and Community Development Financial Institution funding for low-income communities.

About the Author:

Bruce Freeman launched and successfully ran his own high-tech public relations company, Proline Communications, after leaving a management position at a major technology publication firm. For 20 years, he served as Professor of Marketing at the Stillman School of Business at Seton Hall University. He is co-author of the start-up guide, “Birthing the Elephant” (Penguin Random House).

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