Small Business Loans: What You Need to Apply
Posted by Erica Bell on September 25, 2013 in Business Financing, Business Management [ 0 Comments ]
Many small business owners start out with the struggle of finding ways to pay for their new business. Some turn to their own pockets and pull from savings, others ask friends and family, and some even turn to crowdfunding as a means of getting their business and idea off the ground. Even still, many businesses take the traditional route of applying for a business loan through the government or private lender. Before you meet with a lender, that are a few things you’ll want to have ready.
Your Business Plan
Having a business plan is a must and there are a number of online resources available to help new business owners draft business plans for lender presentations. Some could argue that your business plan is the most important document you can bring with you to a lender meeting. Your plan should detail:
- An Executive Summary: Include what your business does or produces, how it will make money and why customers will want what you are offering.
- Market Analysis: Define what opportunities are available, who your audience is and who your competitors are.
- The Management Team: What skills, experience and qualifications does your management team have?
- A Business Model: Provide detailed descriptions of your revenue stream and cost structure. Be sure you deliver realistic, anticipated profit and loss estimates, a balance sheet and cash-flow statements.
Starting a business is no small matter. Paperwork will be necessary, but it will depend on your business and location. Make sure to have all your legal documents in order for any meeting you might have with a lender. If you are in current lending agreements, new lenders will want to see if you are someone who repays their debts. If you are starting a more risky business, they’ll want to see that you took the necessary legal precautions. You’ll want to provide:
- Your business licenses and/or registrations
- Articles of incorporation
- Any franchise agreements
- The status of existing loans and other financing that you are required to repay
Research and the Right Information
Part of getting a business loan is choosing the right bank or lender. Before you head to just any bank, look into different lenders to find one that can actually meet your needs and is more likely than others to do so. Doing the research ahead of time into possible lenders can save from a headache and wasted time.
- Research potential lenders. Look for lenders who have worked with businesses similar to your own. While thinking about big banks may work for some, it isn’t for everyone. Don’t rule out local lenders and smaller banks.
- Get the right paperwork. Many banks and lenders have their own process for loan application, as does the SBA (Small Business Administration). Make sure you have a list of the necessary completed documents.
- Prepare. Prepare ahead of time. Your loan application is a lot like an interview. You wouldn’t want to go in without knowing about the company or the position, right? The same broad rules apply for loan applications.
Finding the necessary funds to get a business off the ground or keep it running isn’t an easy process, but it is something that needs to be done. If you’re like the many small business owners that turn to loans as a way of getting the means you need to get by and thrive, make sure you are prepared before you head to a lender’s office.
(Image: anankkml via freedigitalphotos.net)