Applying for a loan is a serious matter. Both preparation and
knowledge are the best things to have in place when completing a small
business loan application. The following tips will help to ensure
you fill out your application to the best of your ability.
Tip 1: Update Records
Update all of the records to reflect recent changes. One should update: balance sheets, assets, liability and equity. Update the profits and losses statements, expenses, revenue and cost. Prepare cash flow projections for at least 3 years.
Tip 2: Review Documents
Review all loan documents. It may even be a good idea to have a lawyer looks them over before completing them.
Tip 3: Be Organized
Make sure all documentation about the business and personal information is in order. Have all personal background and history listed out. Have ownership and affiliation written up. The business certificate, loan application history, income tax returns, resumes of the owners, business overview and business lease should all be prepared.
Tip 4: Get Informed
Know before hand why the loan is being requested and how the loan will be specifically used.
Tip 5: Keep Records
Keep personal copies of all loan documents for record keeping.
Bank and the Small Business Association
In some cases, it may be hard to acquire a loan for a business and sometimes a bank may turn down an applicant for several reasons, such as: not being in business long enough, having a bad business plan, having zero collateral, etc. In these cases, it may help to consult with the Small Business Association. Their assistance may help the process of getting a loan. You still have to approach the bank and the bank will send this information to the Small Business Association; together they can find a program that is best suited for the application.
Applying for a small business loan can be a daunting task, but if you're prepared and look into several options, the odds can be in your favor. Having a good business plan and up to date paperwork is the first step to being prepared for applying for a business loan. When all of the materials are organized, it shows the lending institution that the business is run by professional owners, and that the loan is going to an organization that is serious about their products and their purpose.
Also, it is a great idea to have a mission statement in place to show the direction and vision of the business, further showing the lenders that you take this application process seriously. Finally, there are many programs that are government funded that are in place to give support to small business owners, in addition to receiving a small business loan from a bank. With all of these resources in place, the all-American dream of working for yourself can become a reality.