5 Steps to Getting a Small Business Loan
Securing a small business loan might seem intimidating but it really isn’t. If you are prepared for the process, you should have no trouble securing the funds you need. Yes, asking for money can be difficult, but you didn’t begin your business for nothing. You’re pursuing your dream, and there are plenty of lenders out there willing to help you along the way.
Explain Why You Need the Loan
When seeking out funding, you will be asked why you need the loan, so be prepared to answer that question honestly. Generally speaking, financers will give you money for start-up costs, day-to-day operating costs, to grow your venture, or to provide a safety net in the event of unanticipated troubles.
Use Your Reasons to Determine the Best Loan
Why you need the money will help you determine which loan works best for your needs and overall financial situation. Some of your small business loan options include short-term loans, which are instant cash that is paid back quickly; lines of credit that work much like credit cards; invoice financing that pays your anticipate expenses in advance. You may also secure a term loan from a financial institution to be paid back over time with interest.
Get Your Qualifications in Order
Update the business plan you wrote when you started your business, or write one if you don’t have it. Run your credit report and your business’ credit report to ensure that all things are in order. If not, prepare a detailed explanation for any negative marks. Prepare financial reports, including your anticipated profits and losses over the next 12 months, and gather all your personal and business tax document and previous returns.
Determine What You Can Afford
Alongside showing your business’ current financial condition, determine the monthly loan payments you can afford and detail how you plan on paying them. Business lenders want to be assured that you will pay any monies lent back and that you have a plan in the event you go out of business before the loan is paid off. You should also prepare a list of your possessions that can be used as collateral for the loan.
Even if you’re a contractor who works in demolition, you shouldn’t go to your loan application meeting looking demolished yourself. When applying for your small business loan, dress professionally and present a good outward appearance along with all the required paperwork. Remember, you’re selling yourself and your business, so make sure you shine brightly.