What you will need for a business loan
Most businesses at some time need additional funding. This leaves most business owners looking for ways to obtain the debt financing that they need. However, it is crucial to understand that in today's lending climate getting a business loan involves a lot more then just walking into a bank and coming out with some money. If you are a business owner who is looking to obtain a business loan you will need to put in some significant preparation long before you even approach the lender. If you are willing to do this type of preparation you will greatly increase the chances that you will be successful in getting the business loan that you want. Here is what you will need for a business loan-
- The viewpoint of the lender-Most business owners are highly passionate about their business. This leads them to believe that there is no reason why a lender wouldn't offer them the business loan that they are seeking. However, you need to take some time to look at the situation from the viewpoint of the lender. This will help you to figure out how you can present your business in the best possible light as far as what the lender wants to see. You should have a clear reason as to why you want the loan, how you will repay it, and most importantly how fast you can repay it. Keep in mind that this will be the information that your lender will be looking for. If you can focus your loan preparation on these steps then you are far more likely to impress your lender and receive the business loan.
- Clean credit reports-Another step that you should take long before you approach a lender is to pull both your personal and business credit reports. This will help you to check for accuracy long before you begin the loan process. You want to make sure that both credit histories are totally spotless. You should also keep in mind that correcting problems or inaccurate information can take a long time so doing this well ahead of the loan application is crucial. The bottom line is that failing to do this may bring the loan application process to a sudden and unhappy halt.
- A well written business plan-Despite any information that you hear to the contrary most lenders will require a written business loan in order to consider you for a business loan. You will need to take this step seriously and make sure that your business plan presents you and your business in the best possible light. Your business plan will need to detail the following items: why you want the business loan, what you will do with the money, the potential for profit from your business, the experience and expertise of the management of your business, and any plans and goals that you have set for your business. You will also need to offer extensive financial documentation that will show what your business cash flow is and what it is projected to be. Any financial documentation that shows that your business is at low risk and that you can repay the loan will also be imperative to offer the lender, as well.
- Personal finance information-Many business owners are surprised to learn that the lender they are working with wants to see documentation of their personal finances, as well. Keep in mind that a lender may assume that if you can't manage your personal finances then you are not a good risk to lend business money to. You will need to be able to show that you can manage your money and that you are prepared to risk your own money for the success of your business.