Tips for Applying for Business Start Up Loans
Starting a business has many tasks. One of them can be the necessity of getting financing. Small business loans can help you:
o Purchase inventory for your business
o Pay for equipment
o To pay for startup costs
o To hire employees
When applying for a small business loan there are a few tips to help make the process go more smoothly.
-Draft a business profile. A business profile documents your sales, describes your business, lists your employees, ownership structure, and business structure.
-If you don’t have a business plan, write one. A business plan will cover the following:
o Executive summary – Write this last. It is a summary of your entire business plan consolidated into a few paragraphs.
o Company description – Goals and objectives are listed here.
o Management – How your business is structured and who is responsible for what. If you are a sole proprietor, then this page will be about you.
o Your product or service – describe your product or service and include your target market, your marketing plan, your price structure and your competition here.
o Financial statements and projections – this will highlight your sales to this point, your expenses and what you realistically expect for the future.
-You’ll also be required to draft a loan request stating how much money you need, why you need them, and how the money will be used.
-Collect your financial statements and get them in order. The lending institution may also want to see your personal financial situation so be prepared with that information as well. If you have it on hand, it will be easier to work with your lending representative and you will appear more confident and organized.
-Many small business loans require collateral to secure the loan. Document what assets you have on hand and collateral if any.
-Have your business documents ready including your employer or tax id number, your articles of incorporation, any insurance that is required for you to own and operate your business.
-Lastly, the following may help increase your odds of obtaining a small business loan:
o Letters of intent from businesses that have done or will do business with you
o References from relevant associates
o In depth research on your competition
o Market data showing demand for your products or services
Small business loans can be a vital way to build or start your business and many lending institutions have special loan programs designed specifically for that purpose. The more organized and comprehensive your documentation is, the better your chances of being approved and getting the cash you need to get started.