Applying for a Small Business Loan
Applying for a Small Business Loan
When you have ideas, plans, and desires
in place, the anticipation of moving forward in operation a small business
is extremely exciting. Only one thing can hold you back - money. Working
with a lender and applying for a small business loan can be easy or difficult,
depending on how much preparation you've put into the process.
The lender will ask for a variety of items
when applying for a small business loan
1. Business Plan.
If you don't already have one, write one.
Virtually no lender will consider you for a small business loan without
the organization, detail, and direction you have for your business, and
all of this is stated in a business plan. For information on how to write
a business plan, visit www.sample-business-plan.org/sample-business-plan-directory.html.
Don't be afraid to hire a professional writer to write or proofread the
plan for you if you're not confident in doing it yourself.
2. Loan Proposal.
Nearly all lenders require a loan proposal
if you are applying for a small business loan. After you've written a detailed
business plan, your loan proposal can be written. The information in a
loan proposal includes details on who you are, including your experience
and business desires; how much money you need and what it will be used
to purchase or fund; how you intend to pay back the loan; and what your
plans are if you cannot pay the loan back in full.
3. Completed Lender's Application.
Most lenders will also require that you
complete a business loan application when applying for a small business
loan. Your application should be very organized and presented in a professional
manner. Don't omit any details, and be completely honest about your credit
history, even if you don't have an excellent credit rating, when applying
for a small business loan. Some lenders base their loans on the character
of the person applying for a small business loan, and if you're "borderline"
for qualifying for the loan, your honest application can prove to the lender
that you are indeed trustworthy for receiving a small business loan.
4. Financial Statements.
If your business is already in existence,
visit the lender for your interview with two years of tax records, as well
as two years of business and personal bank statements when applying for
a small business loan. Not all of that information may be required immediately
when applying for a small business loan, but it's better to be prepared
with the information on hand, rather than have to tell them that you'll
have to bring that in at a later date. Your tax records will show the profitability
of the business, as well as detail its expenditures. Your bank statements
will prove that money is coming in, and that the business is already established.
If your business is yet to be launched, you still need to go to the meeting
prepared with both two years of tax forms and two years of personal bank
statements when applying for a small business loan. This will show the
lender that you are a responsible, reliable individual, that you pay your
bills, and that you file your taxes in an honest, timely, and fair manner.
5. Resume.
While not required for a meeting with
a lender, it's probably a good idea for you to have a current resume with
you for the interview with the lender when applying for a small business
loan. As mentioned, there will be some judgment of your character made
at your loan interview. If this should come into play during the interview,
you can easily present your resume to show your work experience when applying
for a small business loan. This is especially important if you've worked
in the field in which your business will be based. It's also important
in the instance that you have experience in a business-related area, such
as management, marketing, or accounting, to show that you are capable of
succeeding in business due to your experience in working with other businesses.
The bottom line is to be prepared when
applying for a small business loan.
- Visit the lender with all files
neatly presented and very organized.
- Present information as requested during
the application process and interview when applying for a small business
loan.
- Dress for success. Don't show up at your
meeting in jeans and a sweatshirt when applying for a small business loan.
- Don't worry if you've forgotten anything,
and don't get flustered. Offer to drop off or fax the requested information
as soon as you leave the meeting. Offer to provide any additional information
that could possibly play a role in your loan's approval.
If your business loan is not approved,
don't become frustrated. Many small businesses are declined on small business
loans. Look into alternative loan sources, and don't give up.
Small Business Loan Resources:
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