How to Get a Small Business Loan
At some point or another most small businesses will need to get a small business loan. This is so that you are able to get operating capital or to finance an expansion.
You will need to increase your chances of getting a loan and the best way to do this is to be prepared to meet the expectations.
Imagine that someone else approached you for a small business loan. You will want to know why they wanted the money and the chances of them repaying the loan in full.
You need to be prepared in order to get a loan. Firstly get all your documents together that will help in persuading the lender that a business loan is necessary and that you are a good risk.
Documents that you Need
You will need your business plan. The business plan will show the lender why you require a small business loan as well as what you plan to do with the money.
The first question that any lender will ask is are you able to repay the loan. You will need your cash flow projections to give lenders financial data that they can then use to assess the risk.
You can give the lender a fuller financial picture by preparing a list of your personal assets and debts.
If your business is established then you may have to provide past business tax returns.
A credit rating is established when you buy things on credit and pay back the money you owe. Your repayment history forms a large part of your credit rating. It is not necessary to include a credit report with your small business loan application, as lenders are able to check your credit rating.
Making the Presentation
You will then need to persuade the lender that your business is viable and a good credit risk. You need to create a winning loan presentation so prepare in advance.
You should first take into consideration the lenders point of view. They will want to know why you need the money and if you are a good risk. You will need to know the answers to these questions.
The first question can be answered with all the details in your business plan and being able to point to the relevant financial statements, graphs or charts that will help you in convincing the lender that you need the amount of money you are asking for and is what you need to do what you need to do.
In the second question you should have already given thought to your credit risk and be ready to address the lenders concerns.
In order to get a small business loan you will need to tell the lender the collateral you have, the money that you are personally willing to invest in the business and your experience in your chosen field.
You then need to have your documents in order and be prepared to address any concerns that the lender may have to increase your chances of securing a small business loan.