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Let's face it; getting a business loan is a necessity if you are planning to put up a small business. The next question then is how to apply for a small business loan and how you should prepare for it. Needless to say, business startup loan can be very difficult to obtain, but with proper preparation you will surely get it in no time. Read on to know more:
What are the Possible Sources of Business Loans?
You may not realize it yet, but your top source of funding is your family and friends. Yes, you can actually ask them to be an investor in your business. Prepare a business plan and make sure that it is. Once you have already presented to them the possible growth of your business and its market feasibility, you will surely have them as your investors and, thus, your source of funding.
Another source of business loan is through traditional bank loan or obtaining a loan from private financial institutions. They can lend you money, but you may have to offer any of your property with significant value as collateral. What you should also consider is the fact that these institutions may have strict loan requirements and may even look for your personal finance information; however they may also impose lower interest rates. It can be quite challenging, but the lower interest rate will help you grow your business.
If you are not sure what type of loan you should get, you can ask for assistance and assessment from different loan service programs like Lendio. Through this, you will be informed of the best type of loan for you and your business.
What Are the Preparations Needed?
1. To ensure a successful business start-up loan, make sure that you have all pertinent documents prepared. This means that you should prepare your bank statements, proof of ownership of your property or any hard assets including land or car, tax returns, social security information, investment accounts and any documents that will establish your net worth. Generally, it is also important to include documents showing proof of residence and proof or certificate of employment.
2. You need to have a strong business plan. Your business plan will dictate the success of your start-up loan so make sure that you have a feasible market plan with concrete numbers or statistics to support the same. You need to know your target market and how you can sell your product or services and how you can compete with other existing businesses.
3. Perhaps the most important preparation you need is to establish and build your credit score. Most banks will not even take a look at your application if your credit score is less than 640. To build a good credit score you can open two or more credit lines and keep the credit balance at its lowest. It is also important to keep the accounts open for the longest time and always make sure to deliver your payments on time.
Aidan Booth has not listed any work experience.