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All about getting a small business loan

accountant37004762.jpgObtaining a small business loan, can be an overwhelming process. Charting the small business loan market can be scary your first time Many small business owners, dread the idea of having to go through it, however, most businesses need to obtain debt financing at some point. To make the process smoother and a little easier, there are certain things you can do, to expedite your loan.

  • Establish a relationship with your primary bank-Many small businesses have different bank accounts at various banks, but there is generally one bank that is your primary. That is the bank you need to establish a relationship with. This is known as relationship banking, and it can be the cornerstone of small business financing. Another benefit is that a good relationship between small business owners, and bankers, allows for the free exchange of knowledge, and the ability to meet the needs of business. Relationships can be highly beneficial when it comes time to apply for a small business loan, or large credit line. It is important to remember that all banks are in business to make money, and all companies need to assess risk and make profits. A banker, who is informed about your business, can not only provide you with a small business loan, but also offer practical advice on financial matters. There are certain steps that will enable you to set up a relationship with your banker. These are-
1. Make sure that you set up a bank account, at a bank that deals with your size, and type of small business. 2. Make it a priority to manage the account effectively, and avoid overdraws, bounced checks, and low balances. 3. Try to borrow a short-term loan, and pay quickly to establish your business credit. 4. Always keep your bank informed of upcoming issues, missed projections, and missed payments. 5. Work to get to know your banker, and help them to understand your business.
  • Look at yourself-The best place to start when it comes to finding your first small business loan or line of credit is not with your banker, accountant, or lawyer, but with you. Keep in mind that the business is the owner, so it is crucial to realize that your personal credit history is an important aspect in getting a small business loan. The reality is that how good or bad your personal credit history, is can influence your ability, to get a small business loan. In the wake of recent economic crises, banks are carefully reviewing all lending practices, and trying to mitigate the risks. Because of this before you go into a financial institution for a small business loan, it is critical to know your credit history. There are several steps to this process. Here is a few of them.
1. Obtain your credit rating and credit history. You should obtain your personal credit history report from all of the three major credit companies. You have the option to order by phone, mail or online. 2. Know your history-You should also check your credit history from the big three credit bureaus for missing data, mistakes and omissions. For example, you may have canceled a $3,000 credit card limit years ago, but it can still be on file. Your bank may view this as available credit, and limit or reject, your small business loan. 3. Be sure that you can explain payment-If you can explain a late payment, and know why it is on your credit file, and then you need to offer your bank a reasonable explanation.
  • Be patient-It is important to understand at the beginning that getting a small business loan isn't a quick and easy process. You will need to know your business, and your own personal financial situation, in depth. Finally remember that even if you are told no the first few times, you have still have several options to pursue.
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