Coming out of the economic shock of the pandemic, small business lending has started to perk up. The conditions are much better for obtaining financing, but the rules have changed. Banks and other lenders are more willing to lend than they have been for several years. However, they have also raised the bar for small businesses looking for consideration. To get the attention of small business lenders, much less a loan approval, you need to thoroughly understand the new rules when borrowing money for your business.

Prepare a 5-star business plan. Long before you need capital, you need to prepare a business plan that will convince lenders that you know what you’re doing. Your business plan must overwhelmingly convince them your venture can make money and safely return their investment with interest.

Think beyond year one.Think about your business’s cash flow needs in the first several years. It’s better to get all the cash you need upfront rather than having to secure additional funds every year to stay afloat. Calculate the amount of capital you’ll need to get off the ground and grow and then build a business plan to justify it.

Look for lenders who specialize in your industry.Many banks specialize in lending to a particular sector (i.e., online retailers, diet supplements, fashion, etc.). Lenders specializing in your [market segment] will have more confidence in lending to you than those who may not be as up to date on your industry.

Pursue different sources of capital.Even if you’re sure you’ll get capital from one of your sources, shop around for additional sources. You may need them in the future, even if you didn’t need them today. You should consider a Small Business Administration (SBA) loan, angel investors, bank investors, private equity groups, and private institutional lenders.

Tell both sides of your story.Be upfront about the opportunities and risks you see in your business. By not listing the risks of your business, you run the risk of people thinking you haven’t identified them. There arealwaysrisks in starting/growing a business - most investors know this and accept it. However, they won’t buy a CEO who can’t identify the potential risks of the business they’re about to start. If one can demonstrate they can identify and plan for risks, they’re much more likely to overcome them and be a safer investment.

Put yourself in their shoes.For a lender or investor considering committing their money towards something, it all boils down to one question, "am I going to make money, or lose money, on this investment?" Put yourself in their shoes and tell them exactly how and why they will make money by investing in you.

Prepare for the best, the worst, and something in between.Plan for what you’ll do if you raise the capital you need and prepare for scenarios where you might come up short. Between now and the time you get your cash, circumstances may change in the market or your targeted loan terms, such as:

• Interest rate changes
• Amount of money they’re willing to loan
• The time in which they require payment
• Types of capital available

The Boy Scout motto of "be prepared" rings ever true in business. Create plans of attack should lenders not be willing to give you the exact terms you require. Once the money is on the table, you don’t want to get caught unprepared and have to make a decision without adequate time to do your due diligence.