Any business big or small needs financial assistance. If you are running a small business, you will need some help to keep it going. Your business may require a financial help, which may be in the form of a business loan. A type of small business financing is known as debt financing. You can avail the commercial loans that are given by banks and financial institutions. Mostly banks have a policy as per which they will never encourage a loan to beginner; rather they are interested in ongoing businesses. Following steps should be followed to get your loan accepted.
State amount and it reason
A person who is running a business will have an idea how much loan he needs for his company and the reason behind it. Whereas if it is a new bird, they would know nothing about the total costs that have to be incurred and will not be able to present an accurate financial statement. Existing or a new business owner should always have a clear cut idea of what they want and for what they want. It is advisable to spend ample of time to analyze and prepare a request statement.
Visiting SCORE or SBDC office will be helpful
If you are a beginner, then you must make it a point to take advice from experienced business executives who will be of great help. If there is a local SCORE in your area, then you must pay a visit as it is the best free source of advice available. SCORE is a voluntary group of retired business executives who look forward to help you build your business. If you cannot find one, go for online advice. You can even search for Small Business Development Centre (SBDC) if you stay near a university. It is part of Small Business Association (SBA) whose purpose is to help upcoming businesses with application process.
Revise your credit history and credit score
Revise your credit history and credit score if you are applying for a loan for upcoming business or a business less than three years old. As for approval of this loan, your credit history and score will be analyzed and studied carefully by your bank. Make it a point that you request your credit report and study it carefully for errors. If you find any, then request the agency to correct it and if it is not fixed, then ensure you file a dispute. A score of 700 is excellent as owners with this score usually end up getting their loan approved.
Review your borrowing options
Always analyze before you choose your borrower. Large and national commercial banks are not always helpful. There is a better chance of your loan getting approved at the small regional commercial banks. Non-banking institutions can also be considered such as credit unions. There is a loan called microfinance for new business.
Prepare business plan
Ensure that you make a detailed and perfect business plan, as it is the building step for any business to know what you expect to achieve from this venture. Banks put their money only in business plans they find interesting. You should mention your past and present financial statements of your business and the details about the assets you possess and offering as a security on your amount. Also, add a market analysis report and your experience certificate.
Plan presentation before an appointment
Always try to make your loan application as convincing as possible. You can also add a presentation. Assure that you include your executive summary as this is the key point as most of the officers decide your loan based on this. Your package will consist of financial statements, market analysis report and spreadsheet. While fixing an appointment with the officer concerned, request for enough time for a small presentation.