There are a number of places to find new business capital including friends and family, credit cards, or sites like esmallbusinessloan.com. Ultimately though, finding capital is not the easiest of tasks for small business owners which are why precautionary preparation is generally recommended. Without the proper preparation, a small business owner will severely decrease the chance that he or she will actually be awarded the funding.
Thankfully, other business owners have taken the plunge with both success and failure. From those trials and tribulations, I have compiled a basic set of guidelines for small business owners looking for financial help.
Be Sure to Provide Accurate, Detailed Information
It never fails; banks will always want the most accurate information when small business loans are involved. The rep from the bank will want to know exactly what the funds they are providing you with will be used for. They will also want to know your long-term plans for the funds; in other words, what are your goals for the business venture.
As an example, let’s look at a bakery owner who wants to add a new oven to their kitchen arsenal. This oven would be able to double production which, in return, would result in increased profits. However, before getting a loan to purchase this new piece of equipment, the loan representative will want quotes on the overall cost of the oven, an idea on the amount of capital you need for the purchase, and of course, projections on future growth.
When it comes to Financial Information, Don’t be Stingy!
Quite simply put; be prepared to share all of the financial information you have gathered with the loan representative. Lenders will want to be that nosy best friend that has to know every little detail. These details include your personal financial details, company background, and how you plan to expand your company’s growth in the future. Providing all of this information will give the loan representative a much clearer picture of your overall financial predicament, and a clearer picture will work wonders at reducing the length of time it takes to finalize the loan agreement.
Less is More? Nonsense!
When applying for a small business loan, a good plan of attack would include compiling a well-researched list of lenders. A good minimum would be five lenders. Now approach the first lender on your list and start there. If approved, don’t settle! Instead, keep migrating down the list to see if you can obtain a better deal. If your loan agreement is denied, then keep trying and use the denial as a foundation to learn from. What did you do wrong? Where could you improve? Use those mistakes to assist you in your next loan approach.
Never Fear, Help is Here!
Most small business owners dramatically neglect the phenomenal resources that are already available. One of the best resources—the Small Business Administration (SBA)—offers a diverse array of excellent help for small businesses. As far as a business loan is concerned, the SBA employs counselors that can assist you with the overall process. While SBA is a resource itself, it also can provide you with many other resources. Check out their website at www.sba.gov.
Local is Usually Better
There are lending institutions set up the world over, and the major lenders may not be set up in your hometown, there are usually great local institutions that are just as good, if not better. Local lenders are oftentimes much better equipped to assist you and your business prospect because they know the territory much better.