Follow These 7 Steps to Getting a Business Loan
When you own a business, the best way to keep it functional is to get a loan. You can also get it for expansion purposes or to cover day-to-day expenses. The process is not as easy as getting to to the bank and asking for money. A loan is something that’s requested based on trust and commitment. Here are some easy-to-follow guidelines to learn what you should do to get a business loan.
- Make Your Case
The most important question you must ask yourself before getting a loan for your business is “What do I need this money for?” You need to have a clear reason in your head and on paper to ask for this loan. Make a plan or a list of the reasons and stick to them.
- Plan Beyond Budget
If your plan is very specific and rounded up, you’ll probably know how much money you need to get there. Don’t ask for that exact amount of money, always ask for more. Most entrepreneurs think about the money they need to start their plan, but they rarely consider the working capital or contingencies. Play it smart and save what’s left to make payments.
- Know Your Score
Your score credit will always play a role in defining the type of deal you can ask for or the one you are eligible for. If your business shows stability and it’s a reliable source of income, you should face any problem. A business with a FICO rating adding up to 800 is very likely to get the financing it needs
- Expand Your Options
You can make your case suitable for a loan if you spice up the negotiations. Bring a partner with good credit history or look for a guarantor to work with you. You chances will increase considerably.
- Prepare the Package
You will need a lot of paperwork when asking for a loan. The main documents you’ll need to make your case are a business plan detailing your own experience in your working field; the financial results on the performance of your business; and the projections you hope to achieve regarding profits, losses and balances. You’ll probably be asked to provide all your financial information as well, so the lenders can check your background.
- Find a Lender
If you have made your plan, you can present it to a lender so they can analyze the viability of your proposition. Remember to make a strong case. If you have a clear idea of what you want and the final payoff of your plan is solid, you’ll increase your chances of getting a loan.
- Explore Your Options
If you are rejected at first, don’t give up. There are a lot of players out there and the money rolls constantly when it comes to betting on a solid business idea. Try with commercial banks, if that doesn’t work go micro with non-bank lenders, region specific lenders (like a local bank) or alternative lenders.