Small businesses are the
economic lifeblood of this country, and the majority of them began with help in
the form of a small business loan. Very few small business owners have the
funds available privately to start or expand their enterprise, so most are
forced to seek out loans to move their vision forward.
But, there are some things that everyone should know before
applying for a small business loan. It's always important to know what the bank
or lending institution is looking for, what factors go into their decision to
either grant or reject your loan. By playing to these factors, you can better
your chances of securing that money for your business.
What is
your personal story? Firstly, the bank will want to
know about you. Your credit history, experience and education will all be
factors preliminarily considered in the process of your application. These
things speak to who you are as a business person, your credibility for running
your own business.
What is
your business plan? The meat of your proposal will be in
your business plan. This is an outline you will present to the bank detailing
your business idea while providing answers to questions the bank has.
How much
are you applying for? This
figure should be all-encompassing. It should include costs for startup and
overhead, as well as operations costs like payroll and inventory. It is very
important to you and the bank that this number be as accurate as possible.
Where
is this money going? Again,
accuracy and detail are important here. Your business plan should have a
detailed breakdown of how much is going where and for what.
When
can you repay your loan? This is
the question that anyone, from the bank to your wealthy relative will want an
answer for. Be professional. Use financial statements and cash-flow projections
to illustrate how your business will generate profit and be a good investment
for the bank
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