Interest rates are higher, but area banks are still lending to small businesses. Here’s how to get your loan.

Interest rates have come down since their peak a few years ago. However, the prime rate, which is the rate most banks charge to their best and biggest customers, is at 6.75% and most of my clients are paying at least one or two percentage points above that. So financing is still not cheap.

However, money is available for businesses, but at a cost.

“Across Chicago and the broader Midwest region, businesses are still investing and growing, but banks remain disciplined in their underwriting,” said Rob Einstein, senior vice president at U.S. Bank in Naperville who specializes in small-business financing across the Midwest. “For well-managed businesses with strong financials, capital is available and banks remain eager to lend.”

If you’re running a business and looking for financing you will need to be very careful about calculating your return-on-investment before committing. Bankers are known to be risk averse so they’re not going to loan money to customers unless there’s a high level of confidence that the loan will be repaid.

So what do you need to know to get financing in 2026?

As always, it’s a company’s cash flow and their ability to pay back their loan that will decide whether or not they get financing. To Einstein, it remains the “single most important” factor.

“A great business can have strong revenue growth, but if cash flow isn't predictable, repayment becomes uncertain,” he said. “At the end of the day, lenders lend against a company's ability to generate cash, not just its assets or projections.”

From a financial standpoint, banks will always be looking for consistent performance, healthy cash flow, multiple sources of repayment and a clear strategy for the business. Management experience, of course, also matters.

Banks also are looking for companies that have a good handle on their finances. This means regularly prepared internal financial statements, clean tax returns, budgets and cash projections. They want to feel confident that the people that are borrowing money from them know their business and their numbers well and can provide not only reasons why the financing is important but the numbers to support how the money will be used and paid back.

“Some business owners know the operational side of their business inside and out, but they don’t always know their financials as well,” said Oscar Johnson, head of small business banking strategies at Wintrust Financial Corporation, which includes Schaumburg Bank & Trust in Rosemont. “You can be an incredible operator, but understanding your financials is just as important when you’re looking to secure financing or making strategic decisions.”

Burke Groom, an executive vice president at Barrington Bank & Trust in Barrington, is a senior community banker focused on small-business lending. He says it's also important for business owners to be realistic and straightforward.

“It's a mistake to paint a too rosy of a picture with your income and expense projections,” he said. “Revenues for a fledgling company will likely take longer to build, while unforeseen expenses are definitely going to crop up.”

To that end, it's important not to wait until you're in trouble or you’re desperately in need of financing. Bankers aren't generally there to rescue your business. They want to help you grow your business. Waiting too long to seek financing can be a pitfall.

Johnson frequently sees business that don't plan ahead, “waiting too long to begin the loan process, taking too much cash out of the business, being undercapitalized or using short-term debt to fund long-term assets.”

Which is why it's important to build relationships over a longer period of time. This way a banker can better learn your business naturally and be able to present financing options, guidance and even cash flow advice.

Groom says he evaluates the owner as well as the numbers.

“We look at a business owner's experience and the desire to have a true relationship with a bank,” he said. “We're not about just doing transactions, we're about establishing long-term relationships. Having a relationship with us over a longer period of time is a big factor.”

Johnson says the first thing he looks at when evaluating a prospective customer is character.

“While financial statements tell us where the business has been, character helps us understand who we’re partnering with for the future,” he said. “When it comes to relationship-based banking, it’s honesty, transparency and communication that helps build trust and trust is the foundation of every successful banking relationship.”

Finally, it's not all about the interest rate. Yes, interest costs are higher. But most bankers agree that this cost can be mitigated over the long term if the project is right and the return-on-investment is achieved.

“The interest rate is important,” said Einstein. “However, it's only one part of the decision. The bigger question is whether the financing helps create value. If a loan allows a business to purchase equipment, hire employees, acquire customers, or expand capacity in a way that generates returns greater than the borrowing cost, it can still be a very smart investment.”

Johnson agrees and acknowledges the interest rate concern because “rates matter,” but he also encourages business owners to think about the opportunity that financing creates and the return that investment can generate for their business.

“It’s important for business owners to consider the missed opportunity by not making the investment,” he said. “Ultimately, the loan is an investment in the owner’s business. We want to understand the potential return, the opportunity that could be missed by not making said investment, and whether this financing supports the long-term health of their business.”

• Gene Marks is a CPA who owns and operates The Marks Group PC, experts in customer relationship management technologies.