Need a Small-Business Loan?... Seven Ways to Improve Your Odds

Submitted by SadInAmerica on Sat, 08/24/2013 - 2:14pm.


First, let's assume the obvious... You're in business to make money. Sometimes, as you well know, in order to make money you first must have money to spend.
~ Al Krulick

Unless you possess unlimited deep pockets on account of your late daddy's legacy or you just won the Powerball lottery, the chances are pretty good that at some time in the life of your small business, you are going to have to borrow money from somewhere.

Now, let's assume the obvious again: Any business in the business of lending money to other enterprises is also in business to make money. That means that no business that lends money is going to loan your business a dime if it's not worth the risk. Without a preponderance of evidence that you are going to pay back your small-business loan with interest, a lender will make a decision that is in its own best business interests and you will go out the door empty-handed.

Your task is to convince your lender that doing business with your company will be a win-win situation. Here are seven ways to improve your chances of getting a small-business loan:

1. Build Up Your Personal Creditworthiness - An institutional lender will factor in your personal financial situation when determining whether or not to grant your request for a business loan since you likely will need to personally guarantee the loan. Before asking for business credit, work on boosting your personal credit score by paying down some debts.

2. Assemble Detailed Company Information - Even though business lending has become less personal over the years, banks still like to understand who owns and manages the business, how long it's been around and how it functions in the marketplace. Be prepared to explain the history of your business to a potential lender and how you have made it more profitable in the past by cutting costs or increasing revenue.

3. Assemble Detailed Financial Information - You must be prepared to provide complete and updated financial information about your company. That includes copies of all bank statements, tax returns, profit and loss reports, projected financials, liens and mortgages, etc. Spend the time getting your documents in presentable order. Concise paperwork is always important.

4. Be Specific in Your Loan Request Amount - Be prepared to explain to a lender exactly how much money you are requesting and how you expect to spend the funds. But do your research and don't pick a number out of thin air. For example, if you are looking for a loan to purchase new equipment, provide a written quote for the items you intend to buy. If you are looking to ramp up production because of an uptick in orders, be ready to back up your request with hard numbers.

5. Be Specific in How the Loan Will Benefit Your Business - Show a lender precisely how the loan will benefit or add to the success of your small business. Will it reduce future expenses, expand your production capacity, allow you to create a product or service for which there is demonstrated demand? The strength of your vision and how the loan will allow you to manifest it is a key part of your request.

6. Seek Assistance from the SBA - The federal government's Small Business Administration (SBA) is in the business of helping small businesses like yours get loans. The more you know about the types of loans available and which banks work with the SBA, the better chance you have of securing the best kind of loan for your situation at the best terms. Check out the website:

7. Be Persistent - Don't be discouraged if you don't get a loan with your first request. Every lender will have different methods regarding how it decides on making small-business loans and you need to be persistent. Learn from your mistakes and if one lender turns you down, adjust your approach with the next one on your list.


Al Krulick - August 24, 2013 - posted at BeforeIt'sNews


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Submitted by SadInAmerica on Sat, 08/24/2013 - 2:14pm.