In Brief:

• When professional service businesses need financing, lenders want to see a clear strategy for how that capital will drive growth.
• Consistent revenue, profitability, leadership experience, and the ability to repay debt are often more important to lenders than hard assets alone.
• Building a relationship with your INB lender before you need financing can lead to faster decisions, more strategic guidance, improved cash flow management, and solutions that prepare you for growth.

Commercial business loans come in many shapes and sizes — especially because professional service companies have different financing needs than industries like manufacturing or retail.

Your business may be:

• Funding new marketing and business development initiatives
• Managing cash flow during growth
• Hiring new employees
• Expanding office space
• Acquiring another company

And while capital is crucial for these reasons, growth financing is about demonstrating that your business can use capital effectively and be reliable about repaying it.

“Sometimes borrowers often focus only on the amount they need, instead of the strategy behind it,” says Gabriella (Gaby) Cioli, SVP, South Florida Market President. “But we want to see that business owners understand their financial position and have a clear purpose for the capital they’re requesting.”

What Do Banks Look at When Lending to Businesses?

If you’ve ever deliberated about how to get financing for your small business, it helps to understand how bankers think when evaluating commercial borrowers.

Because professional services often have fewer hard assets than other types of businesses, lenders tend to place greater emphasis on business performance and overall financial health.

“We look at the full picture of a business or borrower, which is more than just numbers,” says Zach Lammers, SVP, Commercial Banking at INB St. Louis. “Of course, we look for consistent cash flow and manageable debt, but we are also looking for a clear business plan, experienced leadership, reliable repayment ability, and a strong source of collateral.”

While every loan request is unique, lenders generally evaluate six key areas when determining whether a business is ready for growth financing. 

Six Factors Banks Look For in a Strong Commercial Borrower:

1. Strong Cash Flow and Profitability. Banks need confidence that the loan can be repaid from your business operations. Consistent revenue and profits show your ability to pay back debt. “Cash flow often matters more than equipment or inventory,” Zach explains.
2. Healthy Balance Sheet. Lenders want to see that a business has a solid financial foundation with reasonable debt levels.
3. Experienced Leadership. Management experience with a proven track record helps to build trust. “We want to see revenue that is driven by people and expertise,” Gaby says.
4. Good Collateral. Tangible assets can strengthen a loan request and help support financing opportunities.
5. Strong Personal Credit. Lenders often review the credit history of owners or guarantors during a loan application.
6. Industry Stability. Loans involve risk from the bank’s position, so lenders prefer a stable or growing industry.

“Overall, banks look at trustworthiness, ability to pay, financial strength, assets, and the overall situation of the loan to make sound lending decisions,” Gaby shares.

The Importance of Strong Banking Relationships

Financing decisions are hardly ever based solely on numbers.

“A local banking relationship can make a big difference because decisions are often faster, more personalized, and more strategic,” says Joe Fendi, SVP, Commercial Banking at INB St. Louis.  “Local banks tend to understand the market, the business owner, and the nuances behind the numbers — not just the financial statements.”

Local banks empower intentional business growth with more customized service. INB’s local decision-making and straightforward process allow us to outline loan terms quickly so loan applications are quick and efficient. 

“In most cases, we can move from request to commitment in under 30 days — faster than many of our competitors,” Zach explains.

One of the biggest advantages is the collaboration between lending and treasury management teams.

“Lending provides the capital structure and financing strategy, while treasury helps ensure the business can manage liquidity, collections, payments, and operational cash flow efficiently as they grow,” Joe shares.

Is Your Business Ready to Grow?

The most successful borrowers don’t wait until they urgently need capital. Having early conversations with your banker can help identify financing opportunities, cash flow solutions, and potential challenges before they affect your growth plans.

Before you meet with your lender, run down this checklist:

• Do you have a clear plan for how financing will support growth?
• Are your financial statements current and accurate?
• Can you demonstrate consistent cash flow?
• Do you understand how much capital you need and why?
• Have you discussed your goals with a banking partner?

“The strongest borrowers typically begin discussions well before they need financing,” Zach says. “Businesses that are prepared, transparent, and proactive tend to have the smoothest financing experience.”

Whether you’re planning to start a new business, enhance an existing business, or expand to a new location, INB has an experienced commercial lending team to help. Reach out today!