Tips that can help you get a loan for your small business
Many small business owners despair in this economic climate of their chances of getting a small business loan. However, while there is no denying that it can be difficult to get a small business loan it still isn't impossible. Savvy small business owners who are intent on getting financing from a lender will make sure that they are well prepared before they enter the loan application process. This preparation will include:
- Having correct and up to date credit reports for both the small business and their personal finances.
- Having a well researched and well written business plan. This business plan should include: the purpose for the loan, the repayment plan, the goals for the small business, the current market shard and all applicable financials, and detailed information about all management.
- Having documentation of other financial successes. This should also include: the amount of money invested in the small business as well as any collateral that will be put up for the loan.
Once you have the above listed information there are other tips that can improve your chances of walking away with the business loan that you seek. These tips include:
- Develop a relationship with your chosen bank-Keep in mind that your bank has many different small business customers. If you only appear as a name on a paper the bank may not waste much time considering your loan application. You need to take the time to develop a relationship with your chosen bank right from the first day that you set up your business banking with them. This way when they see that you actually need something they will be more apt to consider you since they have a personal/business relationship with you.
- Apply for a business loan from a lender that has a business division-The bottom line is that not all banks are the same. You want to be sure that you are working with a bank that has a business division. When you choose a bank that has a business division they will have someone who deals with all aspects of business banking which is quite different from personal banking.
- Be the best bank customer-You want to make sure that you are the best bank customer your business bank has. This means avoiding overdrawing your account and having to pay fees. Make sure that you stay up to date on any payments and be gracious and appreciative in your face to face dealings with the bank. Just like you want to go out the way for your best customers you want your bank to feel the same way about you and your business.
- Borrow a short term loan and the quickly repay it-A great way to show your business bank that you are responsible enough to handle a business loan is to take a short term loan and then quickly repay it. This will not only improve your business credit score but show the bank that you can handle your business' finances and that you are ready to move up to handling larger sums of working capital.
- Keep the bank in the loop-Another great tip for preparing to take out a small business loan is to have an open line of communication with your business bank. You want to let them know what is going on with your small business. This way the bank feels much more invested in you success and can offer even additional resources (beyond a business loan), that can help your small business grow larger and be successful. When you have developed this type of relationship with your bank it improves your odds of getting that business loan.