subject: Prerequisites for Acquiring Getting Small Business Loans [print this page] Prerequisites for Acquiring Getting Small Business Loans
You know that you want to launch out on your own and get that small business going. However, the fact that you have no cash looms over you and you're now considering borrowing the money from somewhere. Knowledge is power and planning is indispensable.
Take some time before requesting financial assistant to consider a few things: Your personal financial status, a business plan, and what options are available to you.
Your Personal Financial Status
Before you dive into investing time writing a dynamic business plan, look and see what your personal credit reports say about you and you ability (or lack thereof) to manage finances. By law, annually you can receive one free credit report from each agency without charge. Take some time to request and look over these. If there are late payments, bankruptcies, or high outstanding balances then you know you have some work to do. Anyone would be leery of loaning money to someone with these showing up on their credit report. Knowing what is on this report will also help you to be prepared with the answers when the questions start comingand believe me, they will!
Also, if you notice anything that is not accurate, this will give you the time to correct this BEFORE the lender sees them and thereby avoiding any unnecessary misgivings that it may cause.
Your Business Plan
Now that you are confident that your personal finances are not going to hold you back, it is time to tackle the plan. Although you know exactly what you want to do and how you are going to accomplish it, your lenders are also going to want to know and they can't read your mind. You will need to take some time to write a detailed business plan, a plan that will sell with confidence your business venture and its success. Your business plan is much like your resume that you present in addition to filling out the application. Banks or not emotional, they don't care about the "person", what they care about what that person can do for them. Are you going to make them money or are you going to default on the loan? Lenders desire high-quality people to manage their money and you business plan is their first clue about whether or not you can do it.
So how do you write a business plan?
Check out the Small Business Administration's website to get an idea of what you should include. Most business plans include about 8 different topics. Again educate yourself then if you still need help consider hiring a consultant or purchasing a template or software that can assist you in this process. The investment that you make in a professional and complete business plan will be money well spent if it gets you the loan that you desperately need.
Don't Give Up!
So now whatyou did it all right and still the banks told you no. Consider you other options. Consider credit cards, lines of credit, private lenders, federal, state, and local loans and grants. Some private lenders to consider will be venture capitalists, angel investors, and industry financiers.
Summary
With knowledge and planning applying for financing can be made a little easier. Analyze you credit report first, write a exceptional business plan, and keep your options open. Anything worth having is worth fighting for!
