How to Apply For Small Business Loan in the US
Financing is a crucial element to the prosperity of any business. Business loans are one of the best ways of financing a small business. One way of small business financing is through debt financing. Small businesses are free to apply for commercial loans to banks or other financial institutions. In most instances, banks offer loans to ongoing businesses. It is rare for banks to give loans to startups. However, we have compiled some of the best tips that will help you get a loan even if you are a startup. Below are the key steps you should stick to in the loan application process.
Comprehend the reason for the Business Loan
It seems cliché that a small business owner would know why they need a loan and the particular amount. For startups, the business operator may not be exactly sure about the approximate figures to use. Business operators need to set aside some time to analyze what amount of money they require and for what reason. Most business operators are in the process of determining why they need the funds and for what reason. Business owners clearly figure out how much money they need after preparing financial statements.
Visit Your Local SCORE and SBDC Offices
Getting sound advice from highly experienced personnel is excellent. More so, if you are just beginning your business experienced people will work for your good. SCORE is a nonprofit group that mainly contains retired business executives. When you spot SCORE in your region, do not hesitate to approach them and seek for advice. In the case that you lack a local chapter, you can always get online advice and counseling. There also exists a local chapter of the Small Business Development Center (SBDC) especially if there is a nearby university. SBDC is part of the Small Business Administration (SBA) and subsists to help existing and new small businesses. It will assist small business owners with the application process for a small business loan.
Review Your Credit History and Credit Score
For you to acquire a loan, you should analyze your business credit history and credit score. Therefore, you should spend some time organizing your personal credit history. Making a request for your credit report from each major credit reporting agencies is vital. You should severally revise the credit reports. Be on the lookout for any form of error and request it to be dealt with. In the event an agency refuses to correct the error, you need to file a credit dispute statement. A credit score of ranging from 700 is good and increases your chances of loan approval. Therefore, you should constantly check your credit score.
Start Reviewing Your Borrowing Options
You should carry out a survey of the commercial banks present in the area you are living in. There is a high chance for you to acquire a loan at the smaller local commercial banks. Avoid rushing to the big national banks. Credit unions are the non- bank institutions that may be of great help to you. If you happen to be a member of a local credit union, inform the loan officer about your need to acquire a small business loan. If they actually make such loans, do not hesitate to fill out the loan application forms. Microfinance loans also offer loans to startup businesses. To succeed in life the element of persistence is essential. One lender might turn you down in the same way another lender might accept your loan application.
Prepare Your Business Plan
For you to accomplish any of your set goals you need to make ready a plan. A good business plan will convince any lender to offer you a loan for your business. A business plan comes in handy as it clearly stipulates the amount of money you need and duration to use the money. The business plan is a bonus to the loan application needed by the financial institution. Business tactics consist of numerous parts. A statement of collateral will be included or the sort and worth of assets you will use to secure the loan. You will need to attach an analysis of the market your business will serve as well as a statement of your personal experience.
Plan a Presentation and Make the Appointment
To ensure you get a loan from the financial institution, you should ensure your loan application for a small business loan is compelling. Carefully make ready your presentation of the business plan and application for your credit officer. Ensure you pay attention to details such as financial statements charts, spreadsheets, and graphs necessary. An Executive summary should be included. Most of the entire loan administrators read the Executive Summary first and make a decision as to whether they are interesting based on that. Book an appointment with your loan officer and request enough time to do a short presentation, with visual aids, based on your business plan.
