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.