You may have noticed that
money lending is a bit tight these days and new loans have more
requirements and are harder to secure. When you apply for a loan be
prepared to answer questions, provide documentation and be someone
that your lender wants to invest in. Your job, as the proprietor, is
to make your business as appealing as possible while staying honest
and providing all the facts to the lender.
What Lenders Expect
Small business loan
applications share the same elements. Knowing these elements and
being prepared ahead of time will speed up your new small business
loan application process. You should try to make a good first
impression on your visit to the lender; make an appointment and dress
smartly—let them know you take this opportunity seriously. You should
be prepared to answer the following questions and/or provide
- Why are you applying and
what will the money be used for? This is a good time to show
your detailed business plan. You should already have a specific
idea of how much you are asking for and what the money will go
- Do you have any current
debts, bad credit (business or otherwise)? Supply creditor
information as necessary.
- Resume/personal details.
Think of this as a job interview. The lender wants to give their
money to the best candidate, so prove your background and character
to them through a detailed resume. If you do not have a lot of
professional experience, you may want to include volunteer work,
education and references.
- Financial records.
These are documents that you can start compiling now! Don’t wait
until the day before because you will most likely miss something.
Financial records vary from lender to lender, but assume that you
will have to show tax returns, bank statements and account for any
large sums of money. This is your chance to show that you can keep
- Collateral. As many
new small business loans are for first time businesses, it is normal
for the lender to ask for some kind of collateral to ‘guarantee’
their money. Be thinking about what you could offer as collateral.
- Personal Statement.
You will be required to sign your name stating that you understand
the policies surrounding the small business loan application.
Getting a new small business
loan can be intimidating, that is why there are several programs
available, especially for first-time business owners and minorities.
One of the best resources is the U.S. Small Business Association
(SBA), which works with lenders and offers them a guarantee on your
small business loan. Check with your lender to ensure that they have
a working relationship with the SBA. Another helpful resource is the
Minority Business Development Agency, which helps minorities and women
research loans and grants available in their area. You don’t have to
be intimidated by small business loans; instead you need to be
prepared to answer questions and be proactive in researching