subject: Four Step Method For Getting A Business Loan [print this page] firm lending products are much easier to get than personal homeowner loans, and are obtainable even if your personal credit score is weak. In addition, curiosity rates are lower, you're required by the bank to pay-off the loan less regularly, the homeowner loans are easier to renew and enterprise lending products received more favored treatment by the bank. The reason is that enterprise lending options are standardly less risky than individual lending options. When an individual borrows money for private reasons, he usually spends the money borrowed to pay off past bills, to pay taxes, to pay college expenses, to go on vacation, for healthcare expenses, or to buy new furniture, new clothes, or a new car. whatever the money is spent on is irrelevant. The fact is the money is spent, it's gone and must be repaid.
firm lending options in general, are much different. The proceeds of a firm loan are invested in the productivity of the enterprise. The money is used to buy equipment, supplies, fixtures, inventory, and advertising or to pay employees for their contribution to the business. business enterprise financial loans are used to help the enterprise make revenue, which will then be used to pay off the loan with interest. What follows is a plan for approaching loan companies with a financing deal that is almost completely foolproof and irresistible to financial institutions:
Step One: Prepare A organization Plan. A business enterprise plan is a formal, written description of your organization, in condensed form so that a person not familiar with your business can determine whether or not or not to lend you the money you're asking for.
Don't hire an individual else to do it or use a "cookie cutter" to borrow from another person else's business enterprise plan. It forces you to think by means of each facet of your organization in detail. It assists you to anticipate and prepare for problems.
If you want help in preparing your business plan, consider using one of the many computer business enterprise-planning applications that are available now. They can help you to organize your thinking and can save you a lot of time by doing the detailed financial projections and budgets that are necessary.
Above all, when writing your enterprise plan, be specific and factual. Your enterprise plan is the "advertising" you use to lure traders and lenders to put their money into your business.
supply specific documentation to back up everything in your enterprise plan, your industry, your competition, your product, your management expertise, your location, your costs, your projected sales, your industry, demographics of your customers.
Step Two: Buy The Bonds And Annuities You Need
You can purchase Savings Bonds at your local bank. You must shop around to find the best annuity for your needs at the lowest price. Start by checking with your local insurance coverage agents. Tell them what you need, the guarantee period, the amount of money you want to realize on the annuity when you cash it in.
Step Three: Sweeten The Pot.
Give Your Lender A Perfected guaranteed curiosity In The assets Of Your company To Give Them Even More Security -
This will present creditors with a psychological sense of security, as well as some very practical advantages in case of default. If your company goes under, a perfected secured curiosity will put your lender first in line, in front of all other credit scoreors, in case of bankruptcy. He'll be able to take handle of the assets of the business and sell them in order to recover his money.
Step Four: Give Your Lender More Than He Could Have Imagined
By Offering An Equity Position In Your firm-Your lender will be very pleased to receive bonds or annuities as collateral on his loan to you. They insure he will get his money no matter what happens. If your corporation does well or even breaks even he will get his money plus the predetermined upon curiosity. And if your organization goes bust after a few years your lender may even have cause to celebrate. A big incentive to the lender is the likelihood that you may default half way by way of the loan period. If you fail to pay in full he gets to keep all the money - everything you've paid and the accumulated value of the collateral.
If you don't already own a corporation that is in procedure your likelihood of getting a business loan is nil. This is why so many men and women believe getting enterprise lending options are difficult. They aren't. But getting a business loan for a start-up organization is almost impossible. The answer to this is to start your corporation, build a business history and a track report. Then utilize for a business enterprise loan. Once you've started to produce and sell whatever it is your organization does, the more likely you are to get a organization loan. Your corporation doesn't necessarily have to be profitable. Many unprofitable enterprisees are approved for business enterprise homeowner loans. You just have to have a going corporation, one that's in operation.
