The small business loan can be thought of, and approached by, the lender and loan recipient in the same manner as a business loan but on a smaller scale.  There will be a meeting with a loan officer, but instead of a team of experts presenting the plan to the bank’s VP in your board room with advanced presentation tools at hand, it might just be you and the loan officer in a small office with a white board. Be prepared. The aspiring loan recipient must present a business plan justifying the loan amount in a clear and concise manner with sufficient business contingency planning included.

The Small Businessman’s Burden
The standards in place for a small business to qualify to receive small business loans are different than for a medium business to qualify for a medium business loan, as is the approach that each one will take towards the application process. A small business will not possess the human or real assets of a medium business, nor will it have a medium business’s substantial cash flow to deal with any shortfalls or additional costs should they arise. However much of the human assets found in the medium business comes from self-interested salaried employees with job mobility, whereas the small businessman is often more motivated because the business is his, the money is his, and the collateral (if any) is his. The small businessman is totally accountable for the business’s success of failure and does not have the same job mobility, as does a project manager or even a publicly traded company’s CEO. The loan officer knows this and will weigh heavily the small business owner applicant’s evinced motivation and competence. For example it would barely raise an eyebrow if the chairman of a 200 employee business left a loan meeting in the hands of his 10 person project management team so he could attend his wife’s fundraiser, but it would most assuredly spell the end of the loan process if the president of a 5 employee business did the same.

Personal Accountability
The lender will ask the small business owner or principal provide a credit report while applying for a Small Business Loan, and to make himself financial liable for the loan repayment in the vast majority of cases. Before applying for a small business loan it is prudent for the applicant to check his personal credit report to ensure it is current, accurate, and to have a response ready for any negative items found on the report. The loan officer will be much more likely to give the business money if the owner/manager has his own affairs in order.
A lender may also ask for a guarantor or co-signer as a way to further ensure on-time and full loan repayment. Since the guarantor or co-signer runs the risks forfeiture of his/her personal assets or a blemish on their credit record if they are forced to repay the loan and cannot, they may ask for some compensation which will then need to be factored into business plan. If you ask someone to co-sign the loan with you, you may wish to draw up a co-signer agreement which outlines possible repayment plans and methods in the event of default.

Late charges, loan fees, prepayment penalties, the grace period, reimbursement for attorneys' fees, and default terms are all subject to negotiation during the loan approval process – be sure to itemize and negotiate the terms for each item. For example – when it comes to the section concerning attorney’s fees, insist that the reimbursement will cover only "reasonable" attorneys' fees. Be sure to research and compare terms from different lenders, and do not hesitate to point to another bank’s more favorable terms as leverage during negotiations.