Securing Business Loans in Turbulent Times: Practical Tips for Small Businesses

By Tyler Spoon, Fayetteville Community President, The Bank of Fayetteville

This column by Tyler Spoon, Fayetteville community president for The Bank of Fayetteville, originally appeared in the June 30 edition of the Northwest Arkansas Business Journal. Click here to read the article on the journal’s website.

Economic uncertainty, high interest rates and escalating costs are creating significant challenges for small- to mid-sized businesses seeking loans. The rise from historically low rates has fundamentally altered the lending landscape, particularly in real estate-driven markets like Northwest Arkansas.
Now more than ever, business borrowers must be thoughtful and strategic about accessing loans. Preparation and partnerships are key. Here’s what businesses must consider when seeking business loans in a challenging, unpredictable market:

Strengthen Your Financial Position

In the current environment, financial strength and transparency are paramount. It seems basic, but borrowers should strengthen credit scores and clean up financial statements, ensuring records are clear and accurate. A strong cash reserve is also a plus. Savings sufficient to cover six to 12 months can reassure lenders, especially with real estate, signaling your preparedness for unexpected downturns.

Understand Your Financing Needs Clearly

Being precise about your financing needs enhances credibility. Identify exactly how much funding you require and how it will be used, whether for equipment, real estate or working capital. Experienced investors often do their own underwriting, clearly indicating their understanding of loan structures like amortization schedules and loan-to-value ratios. But if you’re newer to borrowing, using an amortization calculator can help clarify exact needs and realistic repayment scenarios.

Prepare a Strong Business Case

Presenting a compelling business case greatly influences loan approvals. Develop a comprehensive business plan or loan proposal that includes detailed strategies, realistic financial projections and clear market analysis. Provide solid evidence of your market understanding and illustrate clearly how you plan to sustain stable cash flow, manage risk and consistently meet repayment obligations. The latter is especially important during uncertain economic times.

Explore Loan Options Carefully

Not all loans are created equal. Compare different financing options — lines of credit, term loans or SBA-backed loans — and carefully examine terms, interest rates, fees and repayment flexibility. Make sure these details align with your business’ financial capability and long-term objectives. Doing so will avoid potential pitfalls that could arise during economic uncertainty.

Partner with the Right Bank

Choosing the right banking partner is as important as securing the loan itself. Look for banks that offer strong local insights, personalized service and clear, timely communication. In bustling markets like Northwest Arkansas, responsiveness and transparency are key differentiators among lenders. Prioritize working with loan officers who promptly address your questions, set realistic expectations and maintain open communication throughout the lending process.

In today’s economy, careful preparation, transparency and strategic partnerships significantly enhance your likelihood of favorable financing. Businesses proactively managing their financial health, clearly articulating their needs and partnering with responsive community banks will be best positioned to navigate uncertainty and sustain long-term growth.

Tyler Spoon is the Fayetteville community president for The Bank of Fayetteville, a division of Farmers & Merchants Bank, an Equal Housing Lender.