One of the most difficult parts of owning your own business is seeking out funding when you need it. Whether it’s for expansion, purchasing new equipment or gaining new inventory, having the needed cash on hand is crucial to your business’ survival.
To make the job of getting a business loan easier, it makes sense for business owners to prepare ahead of time. There are things you can do to make the process of obtaining a business loan a lot less painful.
Obviously lenders will say that risk is the No. 1 reason for turning someone down for a small business loan. But you can overcome this with a little up-front footwork. Don’t feel like you have to go the route of getting a government or community agency grant. Consider asking for a loan from family or friends, or you could even dip into your own savings. If that doesn’t work for you, then it’s best to go the bank you normally work with.
There are other ways as well. There are numerous sources of unsecured loans online. Their process is usually less arduous than that of a bank or credit union, and you can apply online, as opposed to in person.
No matter which type of loan you are applying for, you should first determine how much money you actually need to borrow, remembering that you shouldn’t borrow more than you can afford to repay.
Next, you should delve into your personal credit history, making sure there are no negative marks that would stall your business loan. If you find there are issues, you’ll want to deal with them before you apply for a business loan.
Next, make sure have a firm business plan. This should include a statement of not only what your business is about, but what your future plans are for your business. Bear in mind that your own experience and education, as well as whether your business plan is feasible, will be a factor as well.
Be ready to explain to the lender what you plan to do with the money. You can’t give a broad answer, such as, “I plan to expand.” This will not do. You need to provide details on the spending of each dollar requested. You should also be prepared to explain how you plan to repay the money.
The last bit of preparation you should do is, on the surface, pessimistic - but you must also be prepared for the possibility that you will not get the business loan. If this happens, ask the lender why you were turned down, and take a lesson from the experience. And next time will be different.
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Original Source: How To Succeed In Business While Really Trying