Discover 8 Tips For Business Small Loans

Introduction

A small business is a privately owned and operated business that has a small number of employees and fairly low sales volume. Most small businesses fall under private corporations, sole proprietorship and partnerships. Most people venture in to small businesses because it can be started at low cost and to have the freedom of working independently as their own boss. Small businesses get their start up and operating funds through personal savings, loans from family and friends, partnerships and loans from the banks. However, is is not always easy to get small business loans especially from the banks.

There are a lot of processes to be followed and many banks are reluctant to offer small business loans for start up. The borrower should therefore understand the lending process and try getting a small business loan from a small community bank as most small community banks consider qualitative information when processing small business loans unlike the big banks.

Step 1

Do research about the small business loan lender you want to approach. This will prepare you and enable you to relate with the banks vision and purpose of the small business loans lender. Know the time the small business loans lender has been operating and its credentials.

 

Step 2

State the amount you area applying for and the repayment term you are comfortable with. Also indicate the details of how you will repay the small business loan. It could be from increased profits, increased earnings, or better still reduced operational costs that increase the business cash flows.

Step 3

Always include your business plan as it serves to answer a lot of important questions relating to management capabilities, information about the market you will be operating in, the kind of business you are venturing in, your other sources of capital and operational cost and many more. But remember to be honest about the realities of your business. Your business plan should compelling and should include your best, probable and worst case scenarios. You must indicate if its a seasonal business, all the risks involved and how to intend to handle them.

Step 4

Seek professional advice. It is important to seek the advice of professionals like attorneys, accountants, bankers and insurance brokers and agents. The small business loans lender will be reassured that you are on the right path when he/she knows that you have access to professional advice and help.

Step 5

State clearly the reason for borrowing the loan. The small business loans lender will want to establish whether you are fit for the loan by looking at how you are planning on spending the loan. The lender will want to see something that is within the normal range and expertise of your business. The amount you apply for would be for different items and operations. Make sure you list all these items and operations that you plan to spend the loan on.

 

 

Step 6

If you small business has been operating for some time, it would be important to present a three year financial statement that should contain quality financial information. It should be signed by your accountant and business partner if you have one. Also, the latest set of your business management account from your accounting are essential as they portray the management quality and capabilities.

Step 7

This reassures the small business loans lender that he/she will not lose the money that they give to you. It will actually encourage them to give you the small business loan. If you are not prepared to provide security, the why should they bother helping you out?

Step 8

Check your credit. Even though you are sure the your credit history is clear and good, it would be important to check on it before you approach the small business loans lender to be sure that there are no errors that will frustrate you. Your credit history will greatly influence the loan approval as it defines your creditworthiness.

Conclusion

Most small businesses depend on loans from a bank for capital and operating costs. Without these loans, some small businesses would not achieve their dreams and goals. When applying for a small business loan, the details you give really matter as they determine who you are and the capabilities of your business. Therefore, ensure that you quality and accurate information to the small business loan lender.

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