Small business loan ideas are available from a myriad of lenders; both traditional and alternative. Small business loan processes transcend your business with the help of required funding.
Therefore, we bring to you 10 essential steps to put forth an effective business loan proposal, and acquire the needed small business loan amount.
#1. Why Do You Need A Loan?
You should precisely know the reason why you need the loan. Chart out all your probabilities to analyze if this small business loan idea will work for you or not. Is your loan requirement for new business or is it to outgrow your prospects? Be clear about the reason to smoothly go through the business loan process.
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#2. Understand The Types Available
Find the right sort of loan you require. If it's your initial investment, getting a loan is difficult at least in the primary years. Startups are left with the options of personal loan, crowd funding and more. However, if the business retains a history of more than a year, there are several types of small business loans including working capital loans, equipment loans and/ or small business-term loans. Each option comes in with the type of business you'll be/ are running.
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#3. Research About The Lenders
Find and compare the best options available regarding the lenders for initiating your small business loan process. There are banks, online lenders or non-profit micro lenders who can help you with the same. Choose the lender that comes to terms with what you are looking for. Approval might be a tedious task and you may also come out empty-handed. It may take quite a long time, but funding is what you need, so don't redirect your goals.
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#4. Do You Qualify?
Several aspects are kept in mind and on papers to find out if you qualify for the small business loan or not. Lenders anticipate on the basis of your credit score as well as the risk profile. Judgment call is made considering factors like assets and time of business, cash flow, outstanding loans, credit report, investors in the organization and financial statements.
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#5. Manage Your Financial Statements
Lenders scrutinize your financial stability hence managing the same is an essential step. All your accounts are reviewed taking into concern the size of small business loan you apply for. Ensure all your records are accurate and complete. You can also ask your accountant to look into the matter before your lender raises any question.
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#6. Loan Application
Gather the necessary documents and information about your business. Before you put forward the business loan proposal and apply for the same, get yourself fully prepared. Depending upon the type of loan, bring together the documents including tax returns, business bank statements, business name, the list of executives, the legal structure, and financial statements, etc.
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#7. Be Sure Of The Amount To Apply
For the small business loan, apply keeping in mind various aspects relating to the business. You may or may not want to borrow an extra amount apart from what you have thought. Determine if the loan is for capital or equipped expenditure? Will there be constant hiring or expansion? Will you put in additional marketing efforts? Is there a possibility of technological advancements?
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#8. Can You Provide Securities?
It's the lender's primary concern about what the borrower can guarantee. It also shows your ability to repay the loan. So, determine what can you provide as the security or guarantee against the small business loan.
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#9. Analyze The Terms Stated By Lender
To assure your business loan process goes hassle free, consider going through the terms suggested by your lender. It helps you know if the same makes sense with your business and loan needs.
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#10. Online Reviewing
You may also want to perform a diligent check on what's available online in the name of the company and its owners. Consider making changes, additions or deletions to make your virtual presence appear credible.
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