Getting a small business loan can be extremely difficult in these tough economic times. Banks and other lenders are hesitant to loan to businesses that do not have a real track record of profits.
So if you are just starting your business or looking to expand, your requests for financing may fall on deaf ears. Still, just because it is difficult to get a small business loan doesn't mean it's impossible.
To put yourself in a better position to get a loan, here are five tips you may want to consider:
- Provide a Solid Business Plan. You need to spend a considerable amount of time on your business plan. Include a detailed description of how you will use the new financing and how that will translate into generating money. A one-page business plan describing your product will not cut it. Lenders are only interested in the numbers and they want to see positive cash flow. The more specific you are, the better, the website ResourceNation advises.
- Take Care of Your Personal Credit History. As with any other loan, lenders only want to lend to you if you are a low credit risk. Your personal credit rating may be the most influential factor to getting approval for your loan, according to ResourceNation.
- Have Your Bank Statements Ready. If you have strong financial records, this will support the notion that you are financially responsible and are less likely to squander the lender's money.
- Provide Strong Collateral. As many small business do fail, lenders typically want to be certain that they will get something back for their investment. Don't be surprised if you are asked to put up your home as collateral for the loan.
- Be Organized. You should avoid the general appearance of sloppiness. Have all your personal and financial information in order. Check with the lender beforehand to know what you need to bring with you.
Keep these small business financing tips in mind to help get your business off the ground. You may also want to check out FindLaw's page on Business Loan Resources for a list of loan sources along with checklists and sample documents.
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