Apply for a Small Business Loan

By: EconomyWatch Content   Date: 1 December 2009

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EconomyWatch Content

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EconomyWatch, Content Team

 

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If you decide to start your own business, you might have to at some point apply for a small business loan. You can obtain the loan by opting for a government sanctioned loan or a private entity loan. The factors you need to consider for either loan are:

·        Your available collateral(s)

·        Your available equities

·        Your credit history

·        Your business experience

·        A well written business plan 

Apply for a Small Business Loan: Steps to follow

·        Meet the representatives of the Small Business Administration (SBA) or visit the Small Business Development Centers (SBDC). Get yourself updated regarding SBA loan requirements, specifications, different practices and procedures, and prepare a detailed business plan.

·        Meet the executives of various local banks or private entities and gather information about their small business loan practices, procedures and specifications.

·        Review all the materials and information you have gathered, prioritize them and start drafting a detailed business plan. A business plan typically includes:

o       A detailed description of your enterprise

o       A description of your competitors and your differentiators

o       A description of the location of your business

o       Financials of your business

o       Your strategies for future expansion, including capital, equipment and manpower

o       A brief bio of the management

o       Projected cash flows for the first year of operation

o       A P&L statement for the same duration

o       A detailed balance sheet

o       A break-even analysis

·        Complete all the paperwork and the necessary documentation

·        Make an appointment with the loan officer to know the decision

·        Start the process all over again, in case your request for a loan is denied 

Apply for a Small Business Loan: Some tips

·        Explore every small business loan opportunity that is available to you

·        Make your business plan the most detailed and effective in order to create a positive impact on the loan executives

·        Always remember to line up equities and collaterals for your loan request

·        Keep your credit scores handy

·        Expect obstacles to getting the loan if you have a less than satisfactory credit record

·        Do not try to adopt any fraudulent step or use incorrect data

·        Do not attempt to circumvent the application process


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