There is an old saying that rings true in small businesses and in life: You need money to make money. Whether you are just beginning a new business or you want to grow the one you already have, there will probably be a time when you need to take out a small business loan to take your company to the next level. Here are the four steps you will need to take.
1. Do Your Homework
The more you know about small business loans, the better chance you have of getting the loan you need at a great interest rate. In addition to reading online articles such as this one, be sure to investigate your different loan options, which banks will offer you the best interest rates and what resources are available to you, such as the U.S. Small Business Administration.
Be sure to research your project as well. Make sure that you have a solid business plan and that your investment is relatively sure. Figure out all the steps you will need to take to earn the money back before you get the loan. Knowing all the details of how you will use your loan and earn the money back will help you get approved.
2. Gather Important Financial Documents
Even with a great business idea, you are not likely to get a loan if you do not have stable financial information to back it up. In the months before you even try to get a loan, gather your personal and company financial documents and go through them, looking for errors. Your lender will be very interested in your personal and company financial history, and you will not want to be denied for an error.
While the documents needed will vary by lender, you should be prepared to show complete financial statements for the last three years, including your balance sheets and income sheets. You should also have statements that show your current net worth as well as any other current debts that you owe. You may also need to gather or write a company summary, a business plan, a loan proposal and resumes for your company owners.
3. Fill Out an Application
Once you have all of the information you need, set up a meeting with your lender of choice. Bring all of your necessary paperwork, and be prepared to give a confident answer to any questions about your business or your plans for your loan. While you do not need to meet with someone in person, it can be very helpful to have a professional walk you through the process and help you know exactly what you need and what to expect, especially if this is your first time requesting a small business loan. Alternately, you may choose to skip the meeting and simply submit your forms online through a website such as Businessloansdirect.com.
4. Don’t Give Up
If your loan is not approved, do not give up. If you were seeking approval from a lender in person, you can always politely ask why your loan was not approved and see if there is any way for it to be approved. You may be able to put down additional collateral, find a co-signer or take out a smaller, less-riskier loan. Be sure to also ask about the Small Business Administration’s Loan Guarantee Program.
If your bank is unwilling to budge, try finding a different lender. You might find a different bank, credit bureau, online company or private lender who is willing to work with you. While the process can be frustrating, keep trying. Keeping improving your financials and your business plan and you will find a way to get the loan you need.
