At one time or another, you will probably find that you need a
business loan, either to get your business up and running or to sustain
its ongoing growth. It only makes sense that lenders want to minimize
their risk, so securing business loans requires a good bit of
preparation. You want to make sure that you can convince the lender that
your business is credible and that you can be counted upon for
repayment.
Admittedly, the process for acquiring a business loan is
generally more complex than getting a personal loan, but it need not
be overwhelming. The key is to have a clear, systematic approach that
covers all of the bases. The three steps that will get you headed in
the right direction are plan, identify references and determine needs.
Let's take a more detailed look at each of these three steps.
Step One-Plan
It may be hard to believe, but some entrepreneurs think
that because they have a good idea, they don't need to plan for the
success of their business. There is a kind of magical thinking that
leads these idealists to believe that somehow or another the business
will just take care of itself once they get started. They do not plan.
Lenders, however, will want more than your enthusiasm to
convince them that your idea is a good one. They will want a business
plan and maybe a plan for marketing. If you don't have a well-thought
out business plan, lenders may not be convinced that your business is
worth the risk.
Step Two-Identify References
Traditionally, we think of references as being people who
can speak positively in our behalf. When it comes to building business
credit, these references need to come from those with whom you have
conducted business. For example, you want to establish a good
relationship with the bank who holds your business account and with two
or three vendors with whom you have conducted business. These can
then serve as references when you apply for your loan.
Step Three-Determine Needs
Before you approach the lender, you need to make sure you
can thoroughly answer the questions of why and how. Why do you need
the loan? The more details you can provide, the more convincing you
will be. How much do you need? Make sure the amount you are requesting
is reasonable and clearly relates to your statement about why you
need it. You may also want to offer suggestions about how you will
repay the loan. Don't wait for the lender to ask. Be proactive.
Lenders want to see evidence that your business is viable
and credible, so the more thorough you can be in your preparations,
the more likely you will succeed. A little prep time spent upfront
can make the difference in whether or not you get the loan.
Mortgages
