Get a Business Loan

By: EconomyWatch Content   Date: 17 December 2009

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 Whether you are starting a venture or looking to upgrade an already established business, business loan are a pre-requisite. The best approach is to get a business loan and take your business to the next level. If you do decide to opt for a business loan, there are several factors to consider:

·        The intent of the loan

·        Length of the loan

·        Type of assets as collateral

 

Banks and lending institutions are usually skeptic about lending capital to start-ups. They like to see some amount of business stability and thus, ask for collateral, such as vehicle, real estate, or other forms of tangible assets. Occasionally, they may ask for collateral like inventory or accounts receivable. Banks are interested in the profitability of your business, and your ability to pay back the loan. This is known as asset-backed borrowing.

 

Get a Business Loan: Important Tips

All banks and lending institutions will scrutinize your financial projections and credit history. The entire loan process may take a long time and you need to visit many banks and meet various loan executives. Perform the following tasks to maximize your chances of securing the best deal:

·        Be professional

·        Have a well-prepared business plan with all necessary documentation

·        Be prepared to answer queries on everything related to your venture, credit history, and financial status.

·        Give an accountable version of every bit of information you share.

·        Don’t spend too much time on selling your business proposition.

·        Have a significant financial stake in your business.

 

Get a Business Loan: Selling Your Ideas

Before approaching a Venture Capital (VC) firm or an Angel Investor, prepare a great business plan and get the management team to gear up for the all important presentation. VCs tend to invest in companies they feel have an experienced management team. Once you have gotten a VC’s nod, write a brief presentation and weed out buzz words and jargon. Explain the following to them:

·        Your venture’s services or products.

·        Your target audience and market.

·        Production costs.

·        Potential market price of your product.

·        Number of units you are likely to sell in the first year.

·        Your long term growth plans.

·        Your exit strategy.

·        The amount of funding.

·        How you are going to spend the money.

 

 

 

 


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