subject: 5 Steps To Securing A Business Loan [print this page] One of the best ways to ensure a secure future financially and to provide for everyday needs is by owning and operating a business. Businesses are an exciting way of employing skills to provide a service that customers require while at the same time becoming a self employed person engaging in a loved and treasured occupation.
In order to secure a good business loan, a good business should adhere to the following points.
A good business will need to be registered and possess all legal documents. These include a license, a certificate of registration or other similar documents. These documents are proof that the business exists and that it is operating officially and legitimately.
Any good business that seeks to qualify for a loan should be trading and making headway in making sales and generating returns. Banks and other lenders will look favorably at any firm that is trading and can return a profit. It is usually an uphill task to convince lenders to advance loans to startups or businesses not yet on their feet. The reason for this is simply that no lender wants to take risks on an unknown venture. Its much better to lend to a business already showing signs of profitability.
In order to qualify for a loan, a business should have its accounts in order. This means that all sales, credits, receipts and other business and financial documents must be filed correctly and proper accounting and auditing conducted. Other documents should also be filed and stored safely so that records will always be available and hence performance of the business can be easily documented.
Business loans are a great way of growing a business and increasing profitability. The funds obtained from the loan can be invested in more stock, bigger premises or acquisition of machinery, equipment and other important facilities necessary to grow a business. The funds should strictly be used for investment in the business and should not be diverted to other uses or misappropriated.
When applying for the business loan at a bank or financial institution, a business should prepare so that their presentation as well as application is successful. The following tips are useful for preparations.
Applicants for business loans should have a good business plan written out and ready. The plan should demonstrate how funds will be used or spent and how much return is expected from the investment. It should also demonstrate how repayments will be made and in what amounts.
Applicants for a business loan should have documentary evidence regarding any business growth, expected ventures and other such information. It may include income statements, receipts and a balance of payments.
