Obtaining a Business Loan

One of the most difficult tasks for small business owners is finding money to start and grow their business. A lack of sufficient capital is also the number one reason for the failure of most small businesses. Despite the large bank bailouts and stimulus money, credit is still tight for small business. Being prepared with a package that is comprehensive and anticipates most common lender questions can drastically improve your chances of obtaining the funding you need to make your business prosper.

So what should be in the loan package? Although the requirements may vary from lender to lender, the list below is essential for most loan packages:

1. Business plan – A well written business plan is a great way to give a lender an overall picture of your business and answer some of the most common lender questions:
   1. How much money do you need? – Accuracy is important, so request enough to invest wisely.
   2. How much do you intend to personally invest? – The more you have invested, the more committed you are to making the business successful.
   3. What are you going to do with the money? – Provide a detailed use of funds.
   4. When will you repay the loan? – Show how the business loan is a stepping-stone for your business. You must convince the lender through financial statements and cash flow projections that you are able to repay the loan through long-term profitability.
   5. What type of collateral do you have to secure the loan? – You may have to provide collateral. Sources of collateral include real estate, inventory, accounts receivable, equipment or security.
   6. What type of expertise do you have in your business? – Provide your background and resume, if appropriate.
   7. What will you do if you don’t get the loan? – Let lenders know that rejection will not discourage you from starting or growing your business. You want to portray confidence and determination that you will try multiple lenders in order to get the money that you need to get your business to the next level.
   8. Cash flow projections – A detailed projection of what you expect to earn and what you will have to pay out.
   9. Business and personal financial statements – Compiled, Reviewed or Audited business financials, depending on the size of the loan. Personal financial statements may be reviewed for determining net worth and possible collateral sources.
   10. Business and personal tax returns – 2 years minimum.
   11. Credit history – Obtain a credit report on yourself and your business before you apply, so you will be looking at the same information as your lenders. If there are inaccuracies or problems, you can address them prior to submitting your loan package. You can obtain your credit reports from the following credit reporting agencies:
       1. Equifax
       2. Experian
       3. TransUnion
       4. Dunn and Bradstreet

If you are looking to start a business or take your business to the next level, LMGW can help you prepare a strong loan package that is comprehensive, projects confidence, and is business savvy. We can also assist in selecting the lender and type of financing that is suitable to your specific business needs. Contact Michael Bryant, Manger, with any specific questions or for assistance with creating your loan package.

ShareThis

Comments are closed.