Small business loan requirements
Most small business owners find that at some point they must look for additional financing. This financing usually is in the form of a business loan. However, in today's tightened lending market savvy small business owners understand that preparation is the key to successfully obtaining the business loan they are seeking. You will need to take the time to prepare to present yourself in the best light possible. Keep in mind that whether you are looking for start up financing or additional financing for an existing business these steps will apply to you. Taking the time to make sure that you have the right business plan and other applicable documents will go a long way to increasing the chances that you obtain the business loan that you want. Here is what you need to know about small business loan requirements-
- Start with your credit report-Long before applying for a small business loan you should pull both your personal and business credit reports (if applicable). You will need to carefully go over both credit reports and make sure that they are accurate and up to date. Do not make the mistake of thinking that your business credit report will be enough. Your potential lender will also want to see that you can manage your personal finances, as well. The reason that it is important to pull these credit reports before applying for a business loan is that if you find mistakes or inaccuracies it can take time to fix them. You want to make sure that everything is reflected on your credit report in a positive light before seeking out a business loan.
- Clearly show that you will be able to repay the loan-Your potential lender will be most interested in your repayment plan. You will need to be able to clearly show that you will have the means to repay the business loan whether you are seeking funding for a start up or already existing business. You will need to demonstrate that your business will or does have a positive cash flow. If you are seeking start up financing you should be sure to include examples of past financial successes. The more confidence that you can inspire with your lender in your ability to repay the loan the more likely you are to get it.
- Have the right documents-It all starts with a business plan. You need to be able to put in writing exactly what your plan is as far as your business is concerned. Simply telling your potential lender what your plans are will not be enough. Your lender will want to see in writing exactly what your plans are when it comes to your business. You should be able to show your business strategy, goals, finances, management expertise and complete plan all in your business plan. If you need help writing a loan-worthy business plan there are lots of online sites that can guide you in the process.
- Show the lender that you are the right person-Savvy financial lenders know that they are not really investing in the product or service of your business but rather the people who will be running your company. You will need to be able to show your potential lender that you and any other management personnel have the expertise and experience to make your small business a success. It is important to be specific about any business achievements that can put you in a positive light. You want to include any past achievements, business experience or any other expertise that will inspire confidence in your potential lender to consider you a good risk for business loan.