What you will need for a small business loan
At some time in the business lifecycle most small business owners find that they need to seek out additional financing. Often small business owners look to debt financing in order to get the working capital that they need. However, in today's tightened lending market it can be a lot more difficult to get a small business loan. The reality of getting a small business loan boils down to the small business owner has taken the time to get the right documentation together and has found the most effective way to present him or herself. The bottom line is that in order to improve your bottom line with a small business loan you will need to do specific tasks. Here is what you will need for a small business loan-
- Start with your business plan-The first step that you should take when pursuing a small business loan is to make sure that you have a well researched and well written business. Your lender will expect to see that you have taken the time to do sufficient market research that will help you determine not only the goals for your small business but a working plan that applies to how you will achieve them. Your business plan for your small business will also need to detail what your business has to offer, who your target market is, who competition is, and why you and any other management personnel are qualified to run the business. If you are unable to document all of these points it is unlikely that you will receive the loan that you are looking for.
- Pull your personal and business credit reports-Long before you begin the application process for a small business loan you should obtain a copy of both your personal and business credit reports. Your lender will be examining both of them closely. You want to make sure that there are no mistakes or inaccurate information on either credit report. If you fail to do this you may find that the business loan application process comes to an abrupt halt. Keep in mind that fixing either credit report can be a time consuming process so you want to make sure that you do this well in advance of actually applying for the loan. Finally, make sure that you do not overlook pulling your personal credit report as your lender will want to see how well you manage your personal finances in addition to your small business.
- Establish a paper trail-The reality of seeking out a business loan is that your lender is not going to be impressed with guesswork or vague promises. You will need to be able to show that you have had pass successes through the documentation that you provide. You can do this by showing paperwork on previous loans that were repaid or other financial successes. In addition, you need to be able to clearly show that you are well qualified to not only run your small business but make it a success. Savvy lenders understand that they are not really investing in a product or service but rather the people who run the company. You need to make sure that you inspire confidence on the part of your lender or there is little chance that you will be leaving with a loan approval. You want to also make sure that you have detailed any noteworthy accomplishments and can give documentation that shows you have the expertise and experience to run your small business. Keep in mind that you will also need to do this for anyone else who is working in a managerial role in your small business. This can be a part of your business plan or can be presented as a separate document.