How to Get a Small Business Loan
A Home Business Article Contributed by Elizabeth Fox-Wise
Considering a Small Business Loan?
Eventually most small business will need to let a loan. Either to finance the initial operating capital, or later for expansion. Whether you are approaching a lending institution or a friend for your small business loan, they will all have the same expectations. You can greatly increase your chance of being granted the loan, by meeting or exceeding the lenders expectations.
Put your self in the other spot for a minute. If someone was asking you for a small business loan you would want to know exactly what the money was going to be used for, and to be relatively sure that the money would be paid back on time and in full.
The Key to Getting a Small Business Loan is Preparation.
First, gather together the documents that you will need to help persuade the lender that a small business loan is necessary and that you are a good risk.
You will need to have with you:
A Carefully prepared Business Plan. The business plan should show the lender not only why you want a small business loan but what exactly you are planning to do with the money.
Cash Flow Projections. The first question any lender has is will you be able to repay the small business loan. Your business' cash flow projections give lenders specific financial data that they can use to assess the risk.
A statement of your personal financial status.
Plus you could also need Past business tax returns and a credit rating report - so it is good to be prepared by having them with you.
How to Persuade Lender to Give You a Small Business Loan
Now that your documents are all prepared, it is time to convince the lender to actually give you the small business loan. You will need advance preparation in order to make a winning small business loan presentation.
Again, project yourself into the lender's role. You want money, but he or she is most interested in the answers to those same two questions: "What are you going to do with the money? " and "Are you a good risk? ". To make a winning small business loan presentation, you will need to come up with the "right" answers to these two questions.
Answering the first question means being fully prepared and informed with all of the details of your business plan, and being able to point quickly and easily to the financial statements, charts or graphs that will help to convince the lender that your business does need the amount of money you're asking for to do what you want to do.
Answering the second question means having given prior thought to the credit risk you represent to the lender and being ready to address any concerns he or she may have in that regard.
Be thorough when preparing for you meeting to request a small business loan. Be fully prepared to defend yourself, your businesses, and your risk level. And above all else, be confident in yourself, if you wish to obtain the confidence of a Lender.
