Starting a business takes a lot of prayer, planning, confidence, and, most important, money. Some entrepreneurs have been able to start from literally nothing and build empires from the ground up. Others have come out of the gate looking for, and securing, small business loans to assist with the expenses associated with starting their own ventures. Whether you are just getting started with your business, or have been in the game for a few years and need a little extra capital to stay afloat or expand your operations, here are four tips to assist to land the loan you need.
1) Research and Network with Lenders.
You have to know which lending institutions and/or friends and family members are in the business of making loans. Trust, and the ability to make repayment, both go a long way when lenders make the decision about whether or not to take a chance with financing your company. Your options may include national lending institutions, regional lending institutions, private individuals, and/or peer to peer lenders.
2) Be Able to Assess and Fully Articulate Your Needs.
There are good and bad reasons to want to procure a small business loan. If you are seeking financing to purchase real estate, new equipment which will increase production and sales, or need it to continue cutting-edge developments in your industry, most lenders view these reasons from a positive viewpoint. Seeking funding to pay back another lender, or acquire assets that are not critical to your business may not be received as well. Have you thoroughly assessed, and are you fully capable of articulating exactly how much you need and how those funds will be allocated? Do you have a budget in place supported by profit and loss and cash flow statements? Being prepared with this information will definitely assist when presenting to the lender.
3) Make Sure Your Personal Credit Is Up to Par.
Most lenders will look to your personal credit as well to determine if they want to lend to you. The loan may require some form of collateral to put the lender at ease about fronting you capital. Most lenders only provide funding to small businesses whose owners have a credit score of at least 700.
4) Follow Directions. All loan applications specifically state what is needed in order to be considered and ultimately approved for a loan. Your process can, and will, stall if all required documents are not filed with the lender within the allotted time. Most applications require (1) Owner’s Resume and Bio, (2) Personal Financial Documentation, (3) Business Financial Information, including Profit/Loss and Cash Flow statements, and a Business Plan.
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