A recent survey of small businesses reported the following:

• 23 percent had lines of credit.

• 7 percent had financial leases.

• 14 percent had mortgage loans.

• 12 percent had equipment loans.

• 25 percent had vehicle loans.

For larger firms, the percentages approximately double in each category.

The ability to get a loan when you need it is as necessary to the operation of your business as is the right equipment. Before a bank or any other lending agency will lend you money, the loan officer must feel satisfied with the answers to these five questions:

1. What sort of person are you, the prospective borrower? In most cases, the character of the borrower comes first. Next is your ability to manage your business.

2. What are you going to do with the money? The answer to this question will determine the type of loan and the duration.

3. When and how do you plan to pay it back? Your lender’s judgment of your business ability and the type of loan will be a deciding factor in the answer to this question.

4. Is the cushion in the loan large enough? In other words, does the amount requested make suitable allowance for unexpected developments? The lender decides this question on the basis of your financial statement, which sets forth the condition of your business, and on the collateral pledged.

5. What’s the outlook for business in general and for your business in particular?