Borrowing money is one of the most common sources of funding for a small business, but obtaining a loan isn't always easy.

Before you approach your banker for a loan, it is a good idea to understand as much as you can about the factors the bank will evaluate when they consider making you a loan.

The key questions the banker will be seeking to answer are as follows:

Can the business repay the loan? (is cash flow greater than debt service?)
Can you repay the loan if the business fails? (is collateral sufficient to repay the loan?)
Does the business collect its bills?
Does the business control its inventory?
Does the business pay its bills?
Are the officers committed to the business?
Does the business have a profitable operating history?
Does the business match its sources and uses of funds?
Are sales growing?
Does the business control expenses?
Are profits increasing as a percentage of sales?
Is there any discretionary cash flow?
What is the future of the industry?
Who is your competition and what are their strengths and weaknesses?.