Small Business Loan Process
No matter if you are considering
launching a small business or if you just want to keep it operating, you know that you need financing. And this comes in the form of a business loan. So, how does the loan process for small businesses work?
Here are all the steps that you need to take when you are considering taking a loan for your small business.
Step #1: Determine The Reason And
While this step seems obvious,
the reality is that many small business owners don’t have a specific reason
that justifies the loan and the same happens in what concerns the amount. In
case you ask how much do business owners need, most of them will state as much
as they can.
However, this is no way to run a
small business. So, make sure that you know exactly why you will be asking for
a loan as well as you need to know how much you need. This will also aid
business owners to plan how they will pay for the loan.
Step #2: Look For Help And
When you want to launch your
small business or in case you need a loan to maintain the operations, you want
to make sure that you look for help and advice from experienced businessman and
executives. You can search for this help online as well as it is also a good
idea to pay a visit to the SBDC (Small Business Development Center). This is a
part of the SBA (Small Business Administration) and their main purpose is to
help small business owners like yourself. You can ask for advice, help, and
they can even help you fill out the application process for the loan.
Step #3: Check Your Credit
History And Credit Score:
In case your business has less
than 3 years of activity, you will need to show your personal credit history
for evaluation. So, it’s better to confirm that your history is cleaned and in
order. One of the things that you should do is to request your credit report
from the 3 major agencies and review each one in detail. In addition, you
should also check on your credit score. In case you have a credit score around
700, you have good chances of seeing the business loan approved.
Step #4: Review Your Options:
Make sure that you take a closer
look at the commercial banks near you. You shouldn’t put anyone aside including
smaller regional commercial banks. However, you should also consider other
non-bank institutions such as credit unions. While not all of them make
business loans, some of them do. So, just go there and ask.
Step #5: Take Care Of Your
When you need to ask for a
business loan, a Business Plan is required. So, this is the time to get to work
and describe not only the past of the business as well as it should include
some projections about it. You also need to make sure that you include the type
and value of the assets that you are planning on using to secure the loan.
#Step #6: Plan Your Presentation
And Go For It:
Now that you have everything in
order and that you took al the previous steps to ensure that you get a positive
answer from the lender, it’s time to plan your presentation. The more
compelling, the best your odds are to get the loan. When you have everything
ready, just make an appointment with the loan officer.