To help stimulate the economy, the government has enacted a program designed to get more loans to entrepreneurs through SBA funding. Yet, many entrepreneurs still find it challenging to get loans because they don't think like a banker.

As a former banker, I understand that financial institutions are like any other business. They want to get repaid the amount they lend, plus a reasonable amount of interest to be able to pay their depositors, their workers, and provide a reasonable return to their shareholders. This is no different than other businesses that must charge enough to pay for materials, salaries, plus provide a return to their investors.

Therefore, the bank first examines whether the borrower has consistent cash coming into the business to make the payments the loan requires. Because most startup businesses will lose money for the first few years, their cash inflow is not steady enough to repay the loans. Importantly, banks are not in business to fund losses. Other investors, such as angel investors, may fund losses and expect equity in return for the risk they are taking to be rewarded when the business grows and is profitable.

Your chances of getting a loan are greater if you've been in business for a few years and the business has positive cash flow and hard assets like real estate or equipment that can be used as collateral. Some franchises may be in this category, but most startup ventures, by definition, will not have positive cash flow. Nevertheless, here are five tips to increase your chances.

1. Business Plan and/or communicate plan - Show how the loan will positively impact the business to make the business stronger and more likely to succeed. Specifically, show how the loan will help the business create or strengthen its cash inflow. A plan demonstrates that you have systematically thought through your business, understand your market and developed financial projections. Be sure that you are able to communicate the plan to your banker.

2. Develop a relationship before you need a loan - Relationships matter.  Don't wait until you need the loan to meet your banker for the first time. An effective way to show the bank that you want a relationship is to open a deposit account. Then, schedule a meeting with the branch manager and/or lending officer. The branch manager can tell you who this is. Often, with community banks, you can gain access to higher-level decision makers than you might with larger banks. If possible, open a deposit account at multiple banks and make sure that one or two are community banks. Tell them you are shopping for a bank - banks are in a competitive business just like you.

3. Find banks friendly to entrepreneurial firms - Most banks have a particular target customer. For example, many banks over the past few years focused on real estate developers. Unfortunately, those banks have not done well and many have failed. To find banks that focus on businesses at your life cycle stage, ask other entrepreneurs about where they bank and what their experiences have been at various banks. Also, do a Google search and find SBA lenders. Many of these will focus on lending to small businesses.

4. Show cash flow and/or collateral - As stated above, banks want to get repaid and the primary asset they consider is cash generated by the business. The best situation for the bank is to see consistent cash flow in the past that will continue in the future. If the loan will be used to help the business generate cash flow, such as to buy equipment that will reduce costs or allow the business to increase sales, prove to the bank how the equipment will do that (e.g., reduce staff level, more efficient distribution, etc.). Banks also want collateral, but as a secondary source of repayment, in case the cash flow dries up. Examples of collateral include equipment and real estate.

5. Keep good records - If you've been in business for more than a month, this is imperative. You must show that you have a handle on your cash inflow and outflow. Get in the habit from the beginning of generating monthly a Balance Sheet, an Income Statement and a Cash Flow Statement.

Last, you must explore multiple banks. If you get rejected by one bank, keep trying. The above tips will improve your chances of getting a bank loan, but cannot substitute for perseverance. 

Greg Henley is the Director of the Herman J. Russell, Sr. Center for Entrepreneurship at Georgia State University. His background includes entrepreneurial experience both as a practitioner and as an academic. Dr. Henley received his doctorate is from Columbia Business School with a concentration in Strategic Management and Entrepreneurship.