Most people looking to start or expand a business are going to find themselves in need of a loan. The majority of business owners do not have the personal finances available to completely fund their business and business loans are vital to helping the business get started or grow. Being prepared with a plan and being in good financial standing are necessary before approaching a lender to ask for a business loan.
It is not likely that a lender is going to grant you a loan without knowing what you plan to do with the money and how you plan to pay it back. So going to any loan meetings or appointments with a well thought out business plan and strong picture of your financial health is important in securing the loan.
Every business needs to have a business plan. Being able to furnish your business plan, whether it is for a start up or an expansion, is imperative. You need to look like you know what you are doing and can show that you have an intent to be successful with your business. Well thought out ideas, research, and knowledge or expertise in your area of interest will go a long way in helping to secure a loan. The business plan doesn’t need to be written by a professional or have intricate details about the day to day operations of the business. It should however show the outline of the purpose of the business, the business structure, and an intent to make money.
It will be important to show that you are in good financial standing personally, as well as be able to show that you have the capabilities to run a financially sound business. If you are looking for a loan to start a business, having your personal tax records, credit history and a summary of your assets are needed. If you are looking to expand your current business, having your personal financial records are helpful, but also having cash flow projections from your business, and past business tax records will be necessary.
Showing how much collateral you have will ensure the lender that you will have the ability to repay the loan. Also, showing how much of your own money or assets you have or are willing to invest in the business shows the lender that you are serious about making the business work.
Some people think that securing a business loan has to be done through a bank, but there are other lending options available. Finding individuals who believe in your business concept or growth are also great potential lenders. Family, friends and smaller lenders might be able to offer you better rates, less interest, and a more flexible repayment schedule. If your credit history is not stellar, these types of loan options might serve your needs better.
The important thing is to be prepared and present yourself as a successful and determined business owner, willing to work hard, and with the means to repay the loan.