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When to Apply for Your Business Funding: A Banker’s Insider Guide

Figuring out when and how to get funding for your business can feel like trying to solve a puzzle in the dark. You know you need capital to grow, but the process of approaching a bank is often shrouded in mystery and a little bit of fear. What are they looking for? What if they say no? For many entrepreneurs, these questions can be paralyzing.

We get it. That’s why we brought a seasoned expert into the studio to pull back the curtain. In our conversation with Demetris Adekanbi, a banking professional with over 25 years of experience, we got a masterclass in financial readiness. If you're thinking about when to apply for business funding, this is the inside scoop you’ve been waiting for.

Demetris made it clear that the most common mistake business owners make is waiting until they’re desperate to ask for money. The real power move is to build the relationship with a banker and prepare your finances before you need the capital.

"Ask when you don't need it. Not when you need it, because you're not in the best situation." — Demetris Adekanbi

The Relationship is Your Greatest Asset

Before we even get into the numbers, let's talk about the human element. Demetris emphasized that you shouldn’t just walk into any bank and ask for a loan. The groundwork you lay beforehand is crucial. This means starting conversations with potential bankers well in advance.

Think about who you choose to bank with. Is it a massive national institution where decisions are made by algorithms, or a local community bank or credit union where you can build a genuine relationship? As Demetris points out, local bankers have a better understanding of the regional economy and are more likely to advocate for you. Their decision-makers are in your community, not in a corporate office hundreds of miles away.

A great banker does more than just process transactions; they open doors. They can introduce you to people in their network, from potential clients to influential community leaders, that can help you grow. Your network is your net worth, and the right banker is a powerful core of influence.

So, court your bankers. Go to local chamber of commerce events. Find out which banks are friendly to your specific industry. Let them get to know you, your vision, and your business when the pressure is off. That way, when you do need their help, you’re not just an application file—you’re a partner they’re invested in.

Behind the Curtain: What Banks Are Really Looking For

Once you have the relationship, you need the paperwork to back it up. Banks are businesses, not charities. They need to see a clear path to getting their money back. Demetris broke down their evaluation process into what she calls the Five Cs of Credit, and getting these right is non-negotiable.

"I always tell people if someone walked into the room and ask you for money and they showed you those same tax returns that did not make money. Would you give them money? Then why would a bank give you money?" — Demetris Adekanbi

Here’s what the bank is scoring you on:

• Character (Credit): Yes, your personal credit score matters—a lot. For businesses in their first five to seven years, you are the business. A strong personal credit history (think 680 or higher) shows you’re reliable. Don’t fall for the hype around "business credit"; most traditional lenders are looking at your personal score.

• Capacity: This is your proven ability to repay the loan. The bank is looking at your cash flow. After all your expenses are paid, is there enough profit left over to cover your existing debts plus the new loan payment? They want to see a healthy margin, what they call a debt service coverage ratio, to ensure you won’t be stretched too thin.

• Capital: How much of your own skin is in the game? Banks want to see that you have your own funds invested in the business, whether it’s cash on deposit, securities, or other assets you can leverage. This shows them you’re just as committed to the venture’s success as they are.

• Collateral: What tangible assets can you pledge to secure the loan? This could be equipment, real estate, or other valuable property. Unsecured lines of credit are increasingly rare, so be prepared to offer a personal guarantee, meaning you are personally responsible for the debt if the business fails.

• Conditions: The bank will analyze the economic climate, the health of your industry, and your business’s trajectory. They want to see stability and an upward trend. This is where having at least two to three years of clean, positive tax returns becomes incredibly important.

Ultimately, preparing to apply for business funding is about telling a compelling story backed by solid numbers. It’s about being proactive, strategic, and building a team of advisors—including your banker—who can guide you to the next level.

For the full, unfiltered conversation on building a fundable business, check out the complete episode with Demetris Adekanbi on YouTube. And to make sure you never miss these kinds of insights, subscribe to the Beyond The Grind newsletter for more tips to help you grow. '''