Small business loans are designed to suit the needs of small businesses. US Small Business Administration is an organization which helps entrepreneurs to realize the dream of owning businesses. Following this mission they assist from planning your business, guiding you at each step. Their expertise helps you eliminate all possible wrong steps a first time. Getting a small business loan involves a fair amount of planning on the business front and on appraisal. If it is small business start up loan you are looking for, you must have a thorough knowledge of the trade, the place you want to start yours from including some knowledge about your competitors. This is what they call SWOT analysis which is a kind of analyzing your strength, weakness, opportunities and threat you expect from the market and your competitors beforehand.
People seeking small business start up loans need to work out their documentation error free as this makes sense to draw out a check list of the documents that are required to be submitted along with the loan application.
Some of the documents one can need to enclose with the applications are:
Business profile – A definition of your proposed business plan
Purpose of the loan – a complete detailed statement
Personal financial statements – For those with above 20% holdings.
Separate statements -for receivables and payables up to 90 days.
Prediction of Cash flow
Whether you’re planning expansion or improvements of an existing small business or getting a new business off the ground, a small business loan can give you the financial support you need. Not all businesses can get a small business loan, so one should take special care in applying for one.
There are following steps to get the small business loans such as-
Obtain a copy of your credit report to ensure its accuracy; you may even want to obtain a copy from all major credit reporting companies for your country. Most financial institutions review your credit report while reviewing your loan application.
Ask the financial institution to get a small business loan for a complete list of documents needed to apply for it. Also ask about additional information the lender requires for your loan proposal. Other information you may need to provide includes three years of financial statements, accounts receivable or payable and a schedule of debts.
Write a loan proposal that includes the exact purpose and amount of the loan you need to borrow. Again, each institution will have its own requirements, but additional requirements may include brief biographies of people in a management position.
Wait to hear the results from the financial institution. If a lender rejects your application and you are located outside of the U.S. then ask your financial institution what options are available for you, but if you are in U.S. then inquire whether it could offer you a loan under the Small Business Administration’s loan guaranty program.