Things you need to get a small business loan
Gone are the days of walking into your local bank, sitting down with a loan officer, and working out the terms of business loan over a handshake. If you are a small business owner who is looking for additional business financing, the first thing you need to realize is that how well you plan, will be the key factor, as to whether you get a business loan or not. By planning and being well-prepared before you meet with your lender, you will stand a much better chance of securing the business loan you need. Lenders will be looking closely at several different factors, and if can show them the information they want to see, they are much more likely to consider you a good risk. Here are the things you need to get a small business loan-
- A stellar credit record-In today's tightening economy borrowers of every kind, must realize that they must have the best credit possible, to even be considered for a loan. This is especially true for small business borrowers. The first step any small business owner should do is pull both their personal and their business credit record. Do not overlook the step of pulling your personal credit report. Your lender will be looking at how you handle money both with your business and in your personal life. Go over both credit reports carefully, making sure that there are no errors or incorrect information. If you do fine some things that are not right, now is the time to fix them. All three of the major credit bureaus have customer service departments who can walk you through the process of fixing things on either your personal or business credit report. You should also keep in mind that errors and problems, with either credit report are not fixed immediately. There is a time factor that is involved. This is why this step is so important if you are going to be pursuing a business loan. Once your credit reports are accurate, you are ready to move on.
- A well-written business plan-Do not believe the recent hype that you don't need a business plan, for business financing. Your lender is going to want to see that you have everything in writing. A well-designed plan for your business indicates to the lender that you are aware of market factors that could affect your small business, and will take the necessary steps to make your business as profitable as possible. Your business plan should also accurately reflect the amount of money that you want to borrow and what you will be doing with it. Most of all the lender will want to see how you plan to repay the money and the time frame you are purposing. If any part of your business plan is vague or unspecific, your lender may determine that you are not a good risk, for borrowing and you will be leaving empty handed.
- Documentation of past successes-This is especially important if you are looking, for funding, for a start up business. Keep in mind that your lender receives numerous loan proposals every week, and he can afford to put money on the ones he feels are going to be the most successful and say no the ones that he doesn't. Therefore it becomes imperative that you are able to show the lender that you have past success in your field of business, your business is growing and you have the skills to manage this additional financing. This can be done with any documentation that show past or present successes with the type of small business; you are hoping to borrow the money for.