With real estate, a good location will help get you the most bangs for your buck. When it comes to getting a business loan, however, thorough preparation is the name of the game.

Regardless of whether you’re a young and hungry entrepreneur or an established business owner looking to grow your business, the bank wants some assurance that you’re a low risk when it comes to the possibility you’ll default on a loan.

Since it often is said that the best defense is a good offense, one way to increase your chances of getting the loan you need is advance preparation.

Some key points to keep in mind as you prepare to request a loan:

Prepare a business plan: A business plan details your strategy for running a successful business. It includes a comprehensive analysis of the key components that are necessary for your venture to be successful. It should include a description of your product or service a competition analysis the funds needed to help you accomplish your business goals, financial performance and projections, and your management experience. You should also be prepared to describe how you would respond to possible scenarios your bank will review the document and refer to it often in its decision- making process. (See “Essential elements of a business plan” at right for additional details.)

• Assemble advisors: Most successful business owners rely on an experienced group of advisors to assist them with the many facets of owning and operating a business. They can benefit from the expertise of attorneys, accountants, bankers, and insurance professionals, for example. Look for advisors who are familiar with your particular industry, or those who have worked with businesses in your industry.

• Complete a loan application: When - asked what kind of loan you need, know your options. Term loans and lines of credit are the most common types. In some cases, other financing programs might make solid financial sense to consider, such as those of the Small Business Administration (SBA).

Your business plan will help guide in the selection of the best type of financing structure for your business. The plan should state exactly how much money you need and its intended uses. For example, do you need capital to buy new equipment or to pay off debt or operating expenses? You should also be prepared to explain how you will pay off your loan and in what time period.

The underwriting process: After meeting with a bank to communicate your needs, be prepared for additional follow-up information that might be required. After reviewing your business plan your banker may have additional questions. For example, the bank may need clarification on the assumptions used in your projections.

Essential elements of a business plan

Summary: The summary includes highlights of your business and it’s potential. It should include a company description including ownership, history (or a startup plan for new businesses), location, and facilities.

Products/Business idea: This is a description of the goods or services you’re offering; use sales collateral to better illustrates what you’re offering. Address issues such as the technology you use, sourcing, and fulfillment, as well.

Market analysis: This addresses market needs, trends, growth, and industry analysis. It answers the questions: Who are you serving, what do they need, and how do you reach them to meet their needs?

Marketing strategy: The marketing plan identifies your target audience. It describes how you will design a compelling message to reach them and identifies which communication vehicles you will use to accomplish your strategy, including print or broadcast media, direct mail, or some other form.

Financial data (historical/projected):

At the very least, this section should include your projected profit and loss, cash flow, and balance statement.

Management: This details the organizational structure of your business, members of the management team and other key personnel, as well as their experience and plan milestones.

Credit approval: The goal of the business owner and bank is to agree on a structure that will meet the needs of the business while repaying the bank in a reasonable fashion. While the interest rate and payments are very important, be sure that your bank can support the other needs of your business, such as cash management. These other nonlending functions are very important to the day-to-day operations of most businesses.