Finding money to operate your start-up or existing business can be a
daunting task. Preparing all the documents you will need ahead of
time is one way to move the process along and minimize the difficulty.
daunting task. Preparing all the documents you will need ahead of
time is one way to move the process along and minimize the difficulty.
1. A Solid Business Plan. A business plan is a must, especially for
a new businesses. New businesses lack a track record for banks to
rely upon. A business plan does not have to be lengthy. A good
plan can be anywhere from 5 to 20 pages and should be concise.
Your business plan should include all the important factors about
your business. Your business plan can mean the difference in an
approval or decline so take the time to make it a winning one.
2. Loan Request. Prepare a detailed report of the amount of
money you are requesting and how the loan funds will be used. The
report should include the type of loan you want and the amount of
working capital you currently have on hand.
Being able to thoroughly explain why financing is needed is crucial
to obtaining a loan. Lenders want to be assured you are requesting
money that will be properly applied toward acceptable uses of the
requested financing. Failure to properly explain why you need the
money may cause red flags in a lender's decision. Major reasons
businesses seek financing:
a new businesses. New businesses lack a track record for banks to
rely upon. A business plan does not have to be lengthy. A good
plan can be anywhere from 5 to 20 pages and should be concise.
Your business plan should include all the important factors about
your business. Your business plan can mean the difference in an
approval or decline so take the time to make it a winning one.
2. Loan Request. Prepare a detailed report of the amount of
money you are requesting and how the loan funds will be used. The
report should include the type of loan you want and the amount of
working capital you currently have on hand.
Being able to thoroughly explain why financing is needed is crucial
to obtaining a loan. Lenders want to be assured you are requesting
money that will be properly applied toward acceptable uses of the
requested financing. Failure to properly explain why you need the
money may cause red flags in a lender's decision. Major reasons
businesses seek financing:
How to get your Small Business Loan Approved
www.rebuildcreditscores.com
July 2007
www.rebuildcreditscores.com
July 2007
More Resources
Business Opportunities
Home-based business
opportunities. Earn extra income
from your computer.
Bad Credit Business Loans
Find alternative funding sources if
you have bad credit.
Micro Business Loans
Do you need just a little cash to
grow your business try a microloan
from the SBA.
Business Loan Sources
A little creativity and al lot of
determination can get you the
money you need.
Home-based business
opportunities. Earn extra income
from your computer.
Bad Credit Business Loans
Find alternative funding sources if
you have bad credit.
Micro Business Loans
Do you need just a little cash to
grow your business try a microloan
from the SBA.
Business Loan Sources
A little creativity and al lot of
determination can get you the
money you need.
Business Credit
How to Build Business Credit
Separate from Your Personal Credit
in 10 Steps
How to Build Business Credit
Separate from Your Personal Credit
in 10 Steps
When applying for a small
business loan or business line of
credit, banks will look at a number
of factors, including but not limited
to sales records, industry type,
number of years in business,
assets and liabilities, account
balances, net income and cash on
hand. There are a number of
things you can do to improve your
chances of getting approved.
business loan or business line of
credit, banks will look at a number
of factors, including but not limited
to sales records, industry type,
number of years in business,
assets and liabilities, account
balances, net income and cash on
hand. There are a number of
things you can do to improve your
chances of getting approved.
- Real Estate Loans - Used for acquisition, construction, or improvement.
- Start-Up Loans - Most lenders will want to see at least a 25% contribution of personal
capital towards the financing requested.
- Equipment Loans - Used to purchase equipment assets
- Working Capital Loans – Money used for operating cash and to produce profitable
revenues.
- New employees and other staffing.
- Small business debt pay off.
3. Invest your own Money. Put your money where your mouth is. I know you have heard the
term many times. There is some truth to it. Lenders like to see that small business owners have
some stake (at least 30% equity) in their own business. Improve your chances of getting a loan
and put some of your own money on the line.
4. Collateral. Describe in detail what collateral you have to secure the loan. This may include
equity in the business, borrowed funds, and available cash on hand.
5. Financial Statements Financial statements will be required for your business and may also
be required for anyone who owns 20% or more of the business. This may include owners,
partners, officers and even stockholders. The financial statements should include a schedule of
debts with balance owed, payment schedules, maturity of loans and collateral, if any, used to
secure those loans.
6. Loan Repayment. Banks want to know when and how you will repay the loan. Use your
financial statements and cash flow projections to convince the bank Convince the bank that you
are able to repay the loan with the expected profits your business will experience. Explain in
detail how the small business loan will increase your bottom line, profits. Be confident and
assured in every document you present to the bank. The more sure you are the more sure the
bank will be.
7. Improve your Personal Credit and Business Credit. Review your personal credit report
before you start the application process. Some lenders may use your personal credit history,
especially if it is a new business, to help them in the decision process. Errors in your credit report
can cost you. Correct any and errors before applying and you will be ahead of the game. You
may have to start the dispute process in order to get errors off your credit report.
If your credit report shows legitimate negative items such as bankruptcy or late payments, include
a letter of explanation. The letter should explain the circumstances surrounding the negative
entries and how you have made improvements so it will not occur in the future. You may also
want to try a bad credit business loan if traditional banks turn you down.
Business owners and entrepreneurs should also make sure their business credit reports are
accurate before submitting a credit application. One way of getting your business credit report is
to contact Dun & Bradstreet.
8. Use Local Banks. Bigger is not always better. Try your local smaller community banks when
seeking business loans. A smaller bank may be more inclined to approve a loan for small
businesses in their area. Your application will more likely get more individual attention.
9. Beat Your Own Drum. Portray a determined and confident business owner. Be enthusiastic
about your venture and talk it up. Never allow rejection to deter you and don't be afraid to let the
bank know that rejection will not stop you from starting or growing your business. If you don't get
the loan ask questions, correct the problems and move on to the next bank.
10. Never Take No As the Final Answer. Turn rejection into a positive learning experience
and familiarize yourself with the loan requirements and process. Always ask for additional
information and find out why the answer was “No”. You may have an error on your personal or
business credit report.
There may have been something the lender did not understand that needs further explanation. If
you have had a hardship and were late paying some bills explain how that hardship is over and
how you are back on track. You may have a high debt-to-equity ratio. A typical ratio is three-to-
one. Lack of collateral or insufficient collateral is another reason a bank may deny. You will not
know unless you ask.
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