Here are the Top 7 Steps to getting a Loan for business.
Although its not so easy as it used to be in the past, before the great recession, banks and other lenders still give loan money to small business owners and startups.
STEP 1. start before Loan is needed: Build relationships with your prospective lender. It is Critical you build trust, loyalty and confidence with your lender before applying for a loan. Remember, people do business with people they know.
STEP 2. Decide on what the money will be used for: Not everything deserves a loan to finance. They are great and flimsy reasons to ask for a loan, great reasons includes financing a piece of equipment, real estate, long term software development or large seasonal sales variances. Flimsy reason to ask for a loan include financing ongoing losses, office build outs, or acquiring non-essential business assets.
STEP 3. Decide how much the company really needs: Most small businesses don’t ask for a large enough loan. Underestimating the amount of money can lead to problems with a lack of working capital sooner than planned. Overestimating can make lenders question the business owner’s assumptions and credibility. Have a well thought out budget that is supported by financial projections (profit & loss statement and a cash flow statement) that is reasonable and shows that the research was done.
STEP 4. Know your credit score: lenders check the credit scores of their clients as a way of determining the worthiness of their principals who are to borrow money. Below is a list of lenders considerations before giving loan to principals.
STEP 5. Find a lender: Find which type of lender is the best fit for the business’ loan needs. Below is alist of lenders in the market
STEP 6. Prepare the loan application package: The loan application package is all the paper work required to get the loan, they include but are not limited to;
STEP 7. Wait: Expect a reply from your lender within Two weeks to Four weeks. Always check in for your application status. It is typical that the lending institution will need additional documentation.
Have you been successful in getting a business loan? If so, tell us how and who was the lender.