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How to get a loan for your small business

money30743392.jpgGone are the days when small business owners could simply walk into their community bank, have a chat with the loan officer, and leave with a small business loan. Today, small business owners must prepare extensively, if they are even going to have a small chance of securing bank financing, for their small business. If you are a small business owner, who is looking, for bank financing, you will have to take the time to prepare thoroughly and carefully, before you even approach the bank. In addition, there are several items that you will need to have with you, before you meet with your lender. You will want to make sure that these items present you in the best possible light, as a potential borrower. Here is what you need to know about how to get a loan for your small business-

  • Have a solid credit report-Before you even apply for your loan, you should pull both your personal and business credit reports. Do not overlook the step of pulling your personal credit report, because the lender will want to know how you manage your personal money as well. Your personal creditworthiness will come into play, even though you are borrowing, for you business. It is extremely important to go over both credit reports carefully, to insure that all the information is accurate. If there are any mistakes, it is important that you should take the time to fix them, before going in to see your prospective lender.
  • Have a well-written business plan-Despite any information that you hear to the contrary, most lenders still require potential business borrowers to have a business plan. A well thought-out and well-written business plan shows the lender that you are intending to be in business for the long term. A business plan shows that you have thought out the needed details, for your business, have a long-term plan, and most importantly to the lender, have constructed a way to pay the loan back. Keep in mind that some vague ideas about expansion or market numbers, will not impress your lender, or inspire their confidence. You will need to be able to show that you have done the research and have a place, for your company in the marketplace, for the long-term.
  • Have a clear plan on how you will repay the loan-This is especially important if you are seeking bank funding, for an existing business. You will need to provide records that demonstrate that you have a history of positive cash flow. You should use any documentation that shows your ability to be able to repay the loan in full and on time. For small business owners who are trying to fund a startup, you may need to show that you have had past fiscal successes. This can be done by providing a record of positive earnings, from a formerly-owned business, or a business you operated in the same industry. However, you can, you must be able to provide a positive picture of your business finance abilities.
  • Have documentation about your abilities-Lenders know that they are not investing in companies, but the people who will run them. You will want to include details showcasing your relevant industry expertise, as well as any tangible successes that you accomplished while owning or operating a business, in your chosen field. You will want to include prior achievements of note. You will want specific examples of how you increased revenue growth, managed a business expansion or how you went about securing new projects and/or clients. It is important to highlight your management team as they will be integral to the success of your business.
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