Small businesses, those employing fewer than 500 people, encounter a unique set of challenges, especially in their first few years of life. About half of all small business owners in the U.S. fund their companies with personal credit. Of the remaining half, 15% claim to have trouble obtaining credit or loans for their companies. As a result, only about 16% of the nation’s loans are for business use. Though the odds appear to be stacked against small businesses, the truth is that applying for a business loan is still a highly viable way to solve cash flow problems. Here, we’ll look at a few important tips for applying for a business loan and getting the capital you need.
Consider Your Options
If you’re serious about success in applying for a business loan, the first step is to approach a lender who has familiarity with your industry and target market. If you aren’t sure where to start, get in touch with your local Chamber of Commerce, Small Business Development Center, or local networking group. It might also be worth approaching small community banks and alternative lenders.
Gather Your Documents
Aside from the business loan application form, you’ll need to submit some basic documentation about you and your business. These might include:
- Statements of personal and financial history
- Statements of your business’s financial history and projections
- List of your ownerships and affiliations
- Business certificate or license
- Loan application history
- Personal and business income tax returns for the last three years
- Personal resumes for each principal
- Copy of your business lease
Prepare Your Application
Applying for a business loan is about much more than simply submitting a couple forms. Most lenders will require an in-depth business plan that explains how you will spend the loan money and how you intend to make the money to repay the loan. Make sure you’re entirely truthful and that you don’t underestimate the amount of money you’ll need in order to accomplish your goals.
Make a Good Impression
When the time comes for your interview, be careful to present a positive, polished, and professional demeanor. Remember that you’re selling yourself, your confidence in your business plan, and your ability to repay the loan. Be clear about the amount you need, your intentions for the money, and what your repayment plan will look like.
Applying for a business loan can be a very involved process. Be certain that you pay close attention to the requirements of your lender and that you submit a complete, quality application. Business loans aren’t necessarily easy to obtain, but they aren’t unreachable either. It’s up to you to demonstrate that you deserve one.