PREPARING FOR BUSINESS LOANS

Getting approved for a startup business loan during these tough economic times can be tough. You can increase your capabilities as a candidate for a loan by doing your due diligence for preparation for your preliminary meeting with a potential lender.

One of the most important first steps when getting ready is to have all the documents ready a lender may ask for. These documents may include: tax returns and past financial statements, a copies of any current loans and their respective payment schedules (if you operate an established business) and a descriptive business plan. There are also tips to follow when getting ready to start any new business.

Business plans should contain:
-Market analysis - A systematic overview of your industry, competitors and target markets.

-Executive summary -  A thorough introductory statement summarizing the key points of your plan; a display into every aspect of your business.

- Organization description - An explanation of your organizational and management, the sales and marketing strategy; a description of products and/or services and all pertinent financial information, including but not limited to the desired loan amount, current and forecasted income statements, cash-flow statements and balance sheets.

- Company profile - A briefing of the industry your company is involved in; detailing the essentials that will make your business more noticeable and better than the competition.

Besides developing a complete business plan, consider these tactics before applying for a small business loan:

- Get in touch with a financial advisor. Consider developing a relationship with a financial advisor before you actually are going to need a loan. By creating a relationship early, you can construct groundwork that the advisor can refer to later on when making a determination about your loan. Find a financial advisor for your business here.

- Explore loan options. Determine what options will best satisfy your needs and be ready to talk about these options when you meet with your potential lender. Are you going to be looking for a secured or an unsecured loan and what sort of terms can your business afford?

- Plan ahead. Foresee the questions a lender may ask and be prepared to answer honestly. Lenders' final decisions are going to be based on facts. Never be unrealistic when answering questions and providing forecasts. Lenders are going to recognize your realistic outlook. It is going to be a good idea to get all of your documents organized before the meeting so that you can pull specific papers at request. This will show that you are prepared and will also exemplify your careful attention to detail.

- Invest in your own business. In the midst of the constricted credit market, managing risk has become the most important factor for lenders. If possible, provide a substantial amount of money or collateral towards your business. Your eagerness to invest in your success will likely reveal added faith in your plan. Learn more about re-investing into your business.

- Being prepared before your meeting with your lender is crucial. The commitment and time you put in before-hand may help improve your appeal as a stable loan candidate in this aggressive market.

Related Reading:
Handling Business Debts
Keeping Business Debt & Personal Debts Separate
Is Borrowing Against Your Business a Good Idea?
How Business Loans Work
Reducing Work-Related Costs

 


 

 


 

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