Financing a new business can be frustrating for an entrepreneur, but when you finally get that business off the ground the sense of accomplishment is worth it. There are several potential sources of funding a small business owner can gain access to, but one of the more common approaches is to seek out a business loan.
There is a process to getting a small business loan that requires a significant amount of preliminary work. A business owner should have his own checklist to refer to in making sure that he has everything he needs to apply for a small business loan.
The business plan is the business owner’s way of selling his business to lenders. It includes sales and marketing plans, a list of key personnel, an estimate of costs, a projection of revenue and an estimate on how much the business will need to borrow.
A lender is not going to consider your loan application if you are not willing to share your company’s financial reports. A lender will want to see your accounts payable, accounts receivable and your expenses. Your projections are found in your business plan. This information is your company’s actual performance. The lender will want to see verified growth in revenue from year to year before investing in your company.
You can get the loan application from the bank itself or off the bank’s website. Fill out as much as you can and have it ready to submit to the bank officer at your meeting. If you come across sections you are unsure of then contact the bank prior to your meeting to find out how to complete the application.
If you are applying for financing for a start-up, then have a working model of your product to show the lender. If you are looking for funds to launch a new product, then have a model of that product and your other products to show. If you are a service company, then bring your marketing materials so that the lender can understand what your service is and how you sell it.
The proactive business owner enters into a loan meeting with a lender prepared to make his case. He has all of the important paperwork filled out and brings all of the materials he needs to convince the lender that the investment is justified. The more professional your presentation is, the more impressed the lender will be.
It helps your business to start out with a business line of credit. The reason is that it allows your business to build its own credit history. Cleartax Accounting Birmingham will help your business to be accountable. As with individual loans, businesses need to be completely dependable in terms of repaying the loan amount. When you fall behind on your payments, it damages your credit history. When this happens, you will have a hard time getting a business loan when you need one. If you want to be able to continue borrowing, your business must be successful. Banks and lenders look at your credit rating, as well as profits and any profits that may be earned from a new investment with a business loan.