Small Business Loans
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 documentation.
- 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 towards.
- 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 organized records.
- 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 resources.