What you need to get a loan for your small business
A few years ago a small business owner could simply walk into their community bank (where he or she probably knew the bank president), apply for a loan, and have it approved before they left for lunch. Those days of easy financing are not over. If a small business owner wants to obtain a business loan, he or she must now be prepared to put in serious time and effort, to even prepare to apply for a business loan. If you fail to make the necessary preparations, before you even approach the bank, you will quickly and summarily be sent on your way, without any even being considered for a loan. Before you meet with your lender, there will be several items that you will need to have with you. Keep in mind that you want to be able to present yourself in the best possible way, in order to be seriously considered, as a potential borrower. Here is what you need to get a loan, for you small business-
- Make sure that you have a stellar credit report-The first thing you should do is obtain a copy of both your personal and business credit reports. Do not make the mistake of getting your personal credit report, because the lender will be very interested in knowing how you manage your personal money as well. The bottom line is that your personal creditworthiness will be a factor, even though you are borrowing, for your small business. You will want to carefully examine both of your credit reports, in order to make sure that all the information is accurate. If you do find any mistakes, it is crucial that follow the process, to correct any mistakes before going in to see your prospective lender.
- Make sure that you have a well-put together business plan-It is important to realize that most lenders still require potential business borrowers to have a business plan. If you have a complete and well-prepared business plan it shows the lender, that you are intending to be in business for the long term. A business plan shows that you have thought out what the business needs, you have a long-term plan, and most importantly to the lender, have constructed a way to pay the loan back. If you present only vague ideas when it comes to your business, your lender will be less then impressed.You want to be able to show that you have done significant research, for the long-term survival of your company.
- Make sure that you have a detailed plan on how you will repay the loan-Lenders will be especially interested in this if you are trying to obtain financing, for an existing business. You will need to have records that show that your business has a history of positive cash flow. If you have taken out past business loans you will want to be able to show that you can repay the loan in full and on time. For small business owners who are trying to get a startup financed, you will need to show that you have had past successes with other endeavors. This is done by providing a record of positive earnings, from a formerly-owned business, or a business you operated in the same industry. However, you need to do it; you must be able to show a clear and positive picture, of your business finance abilities. Included in plan should be a demonstration of your abilities. Lenders know that they are not investing in companies, but the people who will run them. You should be able to detail your relevant industry expertise. This should also include any tangible successes that you accomplished while owning or operating a business, in your chosen field.