Small business loans can be hugely beneficial to a growing organization, helping you purchase inventory, fund day-to-day expenses, or even cover payroll. But due to tight lending standards and other factors, they can also be difficult to obtain.
Because of this, being prepared for your loan application is crucial. Knowing how much you need, what you’ll use the funds for, and having a clear-cut plan from the get-go can ease your loan process and ensure you get the funds your organization requires to keep thriving.
Are you considering a small business loan for your company? Want to make sure you do so successfully? Then read on.
Get Your Ducks in a Row
If small business loans are anywhere on your radar, you’ll want to sit down and hammer out a plan first — before ever contacting a bank or starting the application process.
To get the small business loan your business needs, you’ll want to:
1. Know your why.
Determine what you will be using the loan for. What expenses will it go toward? What goals or milestones will it help you achieve? Lenders will want to know this when evaluating your loan application. You should also determine exactly how much you’ll apply for.
2. Put together a business plan.
You’ll need a business plan when applying for your loan. It should cover your long-term and short-term business goals, your operating expenses, your market, and your financial projections for the next five years. You may also want to include your governance documents, incorporation filings, and recent financial statements in your plan.
3. Work with a trusted lender.
Next, find a lender who’s experienced in small business lending and has a stellar reputation. It’s even better if you can use a banker or lender you already know and trust, and who understands your business. This might even make your loan process easier on the whole.
4. Choose the right loan.
There are many options, including Small Business Administration loans, term loans, business lines of credit, and more. There are even different categories of SBA loans, like STTRs, which are designed for technology companies. Again, working with the right banker and financial institution can help you find the best-fitting loan for your business.
5. Gather your financial documentation.
Finally, gather up the documents your lender will need for your application. This will likely include tax returns, profit and loss statements, bank statements, lease agreements, and any other documents pertaining to the legality or finances of your business. You may also be asked to provide personal tax returns and bank statements to prove you’re a worthy borrower.
Partner with an Experienced Lender
Getting funding for your small business might seem like an uphill battle — but with the right banker (and a plan) on your side, it’s easier than you think. Take time to find a banker who understands your goals and business, and let them lead the way. You’ll have the resources your organization needs to flourish in no time.
References:
- Fund Your Business (n.d.). Retrieved from https://www.sba.gov/business-guide/plan-your-business/fund-your-business
- Jackie Zimmerman (April 23, 2019). Business Funding: Where to Get Financing. Retrieved from https://www.nerdwallet.com/blog/small-business/small-business-funding-business-loan/
- John Rampton (February 20, 2019). 7 Steps to a Perfectly Written Business Plan. Retrieved from https://www.entrepreneur.com/article/281416
