Small Business Loan Guide

Getting a small business loan might mean the difference between success and failure for your business. The process of getting a small business loan involves several steps, and you will need to complete them all successfully. Here are the basics of how to obtain a small business loan.

Locate a Lender

The first thing that you need to do is locate a lender to work with. There are many lenders that would be willing to make a small business loan. Your best bet is to find a lender that works with the Small Business Administration. This is a government organization that makes it a priority to provide loans to small businesses. They have a number of different programs that you can take advantage of if you are a small business owner.

Application

Once you locate a lender to work with, you will need to apply for the loan that you need. You will most likely have to fill out an application form that consists of several pages. They are going to ask you for personal information as well as information about your business.

Personal Credit History

When you are first starting a small business, the lender is going to want to take a look at your personal credit history. Since you do not have any business credit history to refer back to, they are going to instead turn to your credit report. They are going to look at your credit score and your previous credit accounts. If you have a good payment history, a low debt load and a high credit score, this will improve your chances of getting approved.

Business Plan

The lender is also going to want to know about your business plan. They are going to want information about every aspect of your business. They will want to know how you plan on bringing in revenue, what you plan on selling, what you are going to use the loan money for and many other factors.

Feasibility of Business

The lender will want to see exactly how feasible your business plan is. They are going to look at several different factors when it comes to determining the feasibility. For example, they will want to see some examples of this type of business succeeding in similar markets. If you are the first business of your kind, you might have a tougher time getting approved for a loan.

They are going to want to see projections of cash flow for the business over the first few years. They are also going to want to see that you have put some thought into potential problems that could arise. You need to think of some problems that could come up and relay to the lender how you would overcome them. All small businesses incur some problems in the first few years. The lender will want to see that you can take care of these problems if they come up. Overall, the lender is looking for a business that seems feasible to them, and has a good chance of succeeding in your market.

blog comments powered by Disqus