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What you will need for a small business loan

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The current economic climate seems to indicate that small businesses will find it impossible to get a business loan. However, while it may be difficult it won’t be impossible to get a business loan if you are a small business owner who is willing to put in some work and take some time preparing. Whether you are the owner of a small business or a mega corporation savvy business owners will take the time prepare what they need to obtain the financing they are seeking. This is especially crucial for small business owners who may have a limited business credit history and little collateral. However, if you are willing to do the necessary preparation you can obtain the business loan you are looking for. Here is what you will need for a small business loan-

• Stellar credit reports-Long before you begin filling out a loan application you should pull both your personal and business credit report. This will help you to prepare for the loan application process. You will want to be able to show the lender that you have the type of credit history (no matter how short), that they will consider a good risk. It is important to understand that you need to take this step in advance of applying for a business loan because if you find inaccurate or wrong information it can take awhile to correct. In addition, it is especially important that if you are a small business owner that you take a look at your personal credit history. Your lender will want to see that you have the ability to manage your personal credit as well as that of your business’ credit.
• Impressive business plan-It is crucial that every small business owner understand that he or she will need a well written business plan. Despite any information to the contrary most lenders will not even consider a business loan application that does not include a business plan. Keep in mind that your business plan is what will be representing you so you want to take the time to research and write your business plan in manner that presents you and your small business in the best possible light. Your business plan will need to include the following information:
1. The reason for the business loan.
2. What you will be doing with the money from the business loan.
3. What the potential for profit is for your small business.
4. How you will maintain and grow your market share.
5. Details of the experience and expertise of your management staff (including yourself).
6. Your goals and plans for your small business.
7. Financial documentation that shows how you can repay the business loan and what the timeframe for repayment will be.
• Effective personal finances-Many small business owners are surprised to find the depth of interest that their potential lender has in their own personal finances. The reason for this is simple-lenders will assume that if you can’t manage your own money then the chances aren’t good that you will be able to manage theirs. You need to be able to show that you are effective in managing your own personal debt and that you can transfer those skills over to your business finances. In addition, your lender will be interested in the amount that you have personally risked in the development of your small business. This is often an indication of how confident you are in your business management skills. You should be prepared to show that you have invested money, will be investing money, or have collateral that can go toward a small business loan.

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