Getting a business loan these days is more difficult than in the past. The economic situation makes getting a loan hard for nearly anyone to obtain. With a poor economy, coupled with job losses, more people are heading home for the banks.
If you are a business owner looking for financing, you are probably not in a great situation financially. Businesses tend to have high start up costs and more capital to pay for items that the owners do not desire or need to maintain. However, if a business succeeds, the owners usually see a return on investment much higher than what they initially expected. In this case, financing becomes easier to obtain.
The first step in securing a business loan these days is a great idea. Take a look at your finances. Do you already have a list of necessary items such as furniture, supplies, and equipment? Are any expensive raw materials or assets lying around?
The answers to these questions will give you an idea of your ability to repay the loan. If you don't own much, a personal loan may be the best route for you. If you own a small business, however, it is often better to get a bank loan. There are many lenders who specialize in loans for small businesses. These companies can also assist with determining what loan you should be approved for based on your company's needs.
After you have a firm idea of how much you need, find a qualified lender. Your local bank may be willing to work with you to find a loan for your needs. You can also turn to other financial institutions such as credit unions, alumni associations, and nontraditional lenders. Your local real estate agent may be able to refer you to local loan officers. A financial planner, lawyer, or accountant can help you find financing as well.
The loan officer should be able to give you an honest evaluation of your company's needs. They will determine if the amount of the loan is sufficient to start up the business. They should also be able to tell you whether there are other ways of obtaining the funds you need to expand your company. A loan officer should be knowledgeable about the different loans available to you and the pros and cons of each type.
When you discuss loan options with the potential lender, be prepared to provide them with a business plan. This is a written outline of your company that details how you intend to use the loan proceeds. It should be noted that some lenders require additional documentation, so it is advisable to have it ready before meetings with them. A loan officer will not necessarily have the skills required to write a good business plan.
When you are underwriting a loan for your business, don't forget to consider factors related to the owner's lifestyle as well. It can make or break a deal. A person who tends to spend money lavishly might not be the best fit as a business owner. On the other hand, someone who is frugal and conservative may be able to get a business loan with favorable terms.
To find out if you are eligible for a loan, the loan officer will want to know your business history. They will want to see how long you have been your business, and whether or not you ever had financial difficulties. The better the credit rating you maintain, the more likely it is that you will be approved for a loan. However, if you have poor credit, it is still . . . . . . possible to obtain a business loan even with a poor credit rating.
You will also have to provide the loan officer with information on your past income tax returns. They will also want to know what your monthly expenses are and how much cash you currently have on hand. While the loan officer is gathering this information, you can prepare a business proposal. This is simply a short version of the company's vision for the future. Using a simple but eye-catching format, the proposal can get the attention of the loan officer and result in you getting the funds you need.
When you go in front of the loan officer, be prepared to talk about what you have done so far with your business. Explain what you have achieved financially, both good and bad. Even if the loan officer is not impressed, you may be able to convince them that your company has room to grow. Remember to stress that the money is for expansion, and that with the help of the loan, you plan to take your company to the next level. While you may not be approved for the entire amount, you should at least be able to afford the start up costs and other fees associated with getting a loan to start a 85k business.