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How to get a good business loan.

Here are some tips and guidelines on how you can get competitive rates and terms for your business loan.

Here are the steps that you need to go through in order to find competitive rates and terms for your business loan:
1.Prepare your application.
2.Interview potential lenders for your business loan.
3.Shop around for the best loan and the best rates and terms.

1.Prepare your application.
Putting together a fantastic loan proposal that will demonstrate to investors and lenders that your business is worth the risk of their investment and that you will be able to pay back your loan.A good written loan proposal can also help you get better and more competitive rates and terms.

So here are the components and the necessary inclusions for your written loan proposal.This is where you are going to make your first and your only impression, so you should make it as good an impression as you can.

  • Begin with a cover letter or executive summary.

This cover letter is the chance for you to explain who you are.This is where you include a summary of your personal background and business experience.This is also where you explain the nature of your business and the purpose of your business.In your executive summary, you also need to set forth how much of a loan you are asking for, along with the purpose of your requested loan.You also need to describe how you will be using those loans within your business plan.Also, how are you going to repay this loan?

While this seems like a lot of information, you need to try to keep the information succinct.Short and to the point is the way to go.

  • Double check with your proposed lender to make sure that your proposal is written in the required format.

  • Description of your business

This section needs to include the following information: the type of your organization, the date of the information that you are including, the location of your organization or business, your products and/or the services that you offer, a short history of your business, proposals for the future of your operation, an overview and analysis of your competition, an analysis of your customers, and a list of your current and proposed suppliers.

  • Management experience

In this section, you need to include a resume of each owner in your business.You also need to include the resume of the major managers within your business or organization.

  • Personal financial statements

Most lenders require a financial statement for all principal owners and guarantors.This should be within the last 90 days.Include last year's federal income tax return.

  • Loan repayment

This is where you set forth the plan that you will come up with for repaying your loan.Include sources and a time frame.You should also include proposed budgets, your cash-flow schedule, and other pertinent and related information.

  • Existing business

Include all of your financial statements for your business for the last three years.You have to include a reconciliation of net worth, along with your profit and loss statements and your balance sheets.Don't forget your accounts receivables and accounts payable along with your term debt.

  • Proposed business

You need to include within your loan proposal apro-forma balance sheet that will demonstrate to lenders the sources of your equity and other funds along with how you will use them.

  • Projections

In order to demonstrate to a lender that your business will be successful, you need to provide projections for your future business operations.Include expenses and earnings, along with explanations for your figures.Any documentation will be helpful.

Now it's time for you to shop around.You need to take your loan proposal to different lenders.A demonstration of an ability to pay back your loan and to be competitive in your business will get you more competitive rates and terms for your business loan.

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