7 Easy Steps to Getting Small Business Loans
If you are looking to get a loan for your small business and you need some ideas on how to go about it successfully, then this article is for you.
Finance is one of the major determinants of growth in any business, where it is lacking, the business will be crippled.
That is what gives rise to small business owners seeking for loans to support and expand their businesses while others seek for loans to establish new businesses.
It should be well-known that not all applications of loans are usually granted due to different reasons; one of which is when the applicant did not follow due process.
Though getting loans from financial and other lending institutions may not be that easy, however, being knowledgeable about the requirements to be met to have your loan application successful will greatly help.
To help you succeed in getting the loan you so much want for your small business, here are 7 easy steps to follow:
7 Steps to Getting the Loan your Small Business Needs
- An Organized Business Plan
Â With an organized business plan document on your hand, some level of tension will be reduced.
That is to say that at the introduction of the business, the operations and objectives, value and standard would have been taken care of, in a well prepared business plan.
The profits and success of the business could be seen in its business plan without much ado.
It should be noted that business plans are prepared systematical in order to track all the happenings in the business; all the changes and increment are recorded in the business plan.
A business with a well composed plan will stand a better opportunity to be granted a loan, whether you are applying as a brand new business or an already existing one; having a thoroughly prepared business plan will give your business an advantage in getting a loan.
- Accurate Account Records
Following the business plan, for small businesses to be granted loans, the party lending out the money will want to be sure that recovering of their money will not pose any difficulty.
Therefore, they will require some financial statements to be provided for them to know the financial strength of the business applying for the loan.
The lender will like to evaluate some financial documents like the cash flow statements, income statements, and balance sheets.
Other aspects they will look at are the gross sales, profit margin, and the debt ratio of the business, which should have been in operation not less than ninety days.
All these are financial instruments the lender uses to size the capability of the enterprise.
- The Purpose and Amount of the Loan
Stating the purpose for the loan and the amount required will enable you to determine if really the business needs that loan at that point in time.
To the lender, the purpose for the loan is vital; it will enable the lending institution to guide the borrowing entrepreneur the opportunity to access the various loan programs they operate.
Once you are able to draft a reasonable budget that covers the purpose for the loan, then you will be able to estimate the amount of money that will be justified as loan.
Knowing the purpose for the loan and the amount involved will aid the lender to know if the borrowing party will be able to realize the expected returns from what they intend to invest the money on, and if they will be able to repay the loan.
- Make an Executive Summary
This is the time to write down everything about the business and the loan in summary, that is, a brief description of the business settings, the amount you are applying for, the purpose for the loan, and the pay back plan.Â
- Research for Lending Options/Opportunities
When you have gotten the necessary documents for seeking a loan ready, it is time to make your research for good options that will march your need.
You have the options of bank and non banking institutions to approach for the loan. It is a bit difficult these days to get loans from banking institutions compared to non-banking organizations like OnDeck, which offers various financial solutions to small business owners.
You can also do a search online for other institutions that can help you get the right loan for your business.
Need loan support to grow or expand your business?
- Completing and Submitting Application Forms
At this point, before you set out to complete the forms for your chosen option, make available all requested documents.
Mostly, you will have volumes of forms to complete; absolute carefulness should be maintained here in order not to give wrong information.
Following the steps earlier given in this post, completing the forms should not pose a big problem to you, though it may take some time to complete them due to the processes involved.
That is why you need to do your home work properly and give quality time to this section, after which you are ready to submit your application.
- Waiting Time
This is the time to wait for the decision of the lenders; this period may take less than six weeks for approval to be made. You can find out from the lending institution how long you need to wait for their approval.
Getting a loan for your small business requires going through certain processes for the lending institution to consider your application.
This post provides some useful tips to help you properly put your loan application together and get a favorable response from financial institutions. So, make use of them and have some luck!