What you will need to get a business loan

Most small businesses at some point in their business cycle must get a business loan. The variety of reasons, for this, is as different as each business. However, it is crucial to understand that no matter why you are getting the loan and who your prospective lender is (bank, family, friend etc.), that person will have the same expectations. The bottom line is that you can greatly increase your chances of successfully securing a small business loan, by being prepared to meet those expectations. The first step is to put yourself in your lender's shoes. Consider what you would want to know if someone was coming to you, for a small business loan. Chances are that the most important things you would want to know is exactly why he or she wanted the money,and what the chances were that he or she would repay the loan,in full and on time. This means that the most important thing you can do is prepare. You will need to take the time to gather all of the pertinent information and documents that will show your lender that you are a risk worth taking. Here is what you will need to get a business loan-

A well written business plan-This should show your lender in detail the following aspects of your business-
1. Why you want the loan
2. What you will do with the loan
3. How profitable you will be
4. Your past experience
5. Your overall plan for the growth of your business

Cash flow projections-Your business's cash flow projections should give lenders concrete financial data that they can use to assess the risk of your lending to you. You will need to show on paper, that you will be profitable enough to repay the loan, in full and most important on time.

• A statement of your personal financial status-This will include a list of your personal assets and debts, in order to give the lender a fuller financial picture. It is crucial to understand that you are your business. You will be scrutinized, for how you handle your personal finances, as well as the businesses.


• You may also need the following documents:


• Past business tax returns - If your business is established and you have past business tax returns, you will most likely be asked to bring them in. Lenders will use these to get a better idea of how your business is doing financially. The number of years of tax returns that will be needed can vary, from lender to lender.


• Your credit rating report-Most often the lender will obtain a copy of your credit report, but you may want to get one before you begin the loan process. This will give you a chance to check and make sure, that there are no errors on your credit report. You should get a copy of your credit report by contacting the three major credit bureaus. Keep in mind that your loan repayment history will play a big part in establishing your credit rating, but all of your "credit" dealings make up the history that's used to determine your credit rating.

Finally, be prepared to explain to your lender the following-

• How much money you're personally willing to put into the business-This is because being willing to risk your own money shows the lender that you're committed to making your business successful. This will also include any collateral that you have, for the loan.


• Your experiences in your chosen field-Lenders understand that behind any business are the people who run it. Because of this any potential lender will want to know more about you. You should be prepared to talk about yourself when you apply for a small business loan.