Tips on How to Get a Business Loan
Bankers want to loan you money. They really do. If banks don’t lend money, they make very little profit. But everybody does things for a reason and bankers are no different. If you want a business loan, you have to give the banker a reason, or even better, a lot of reasons to make the loan.
There is no law that says that you have to present a business plan if you want to borrow money, but there may as well be. A business plan shows the reader how serious you are about your business now and in the future. Besides a plan a good business plan also shows hard numbers. Yes, it’s possible to get a loan without a business plan, but having one increases your odds.
There are a few matters of utmost importance when applying for a business loan.
• If you own a pizza restaurant, your customers expect to see you wearing some tomato sauce on your garments. Bankers don’t. A loan meeting is a business meeting. Wear appropriate business attire. Look in the mirror. Would you loan money to this person?
• Do you have collateral? Collateral is something of value that you put on the table to ensure that your loan gets paid. Liquid collateral such as a stock or bond portfolio is the best. If you default, the lender just cashes in. But real estate can often be used. If you own a parcel of land for a future vacation home, just make sure it’s clear of liens and you have something of value to put forward.
• Is your credit good? If you have poor credit, the only way you will get a loan is if your collateral far exceeds the amount of the loan you are seeking.
• You should have an up-to-date and well written business plan as discussed above.
• Show real numbers. If you have a business plan, you are already covered.
• Are you a start-up and haven’t opened your doors yet? Banks, understandably, are wary of new ventures. If this is you, the bank will require sufficient collateral to make the loan. Otherwise you will have to seek venture capital and the investor will want to own a substantial part of your business.
If you need a business loan, it’s your job to show you’re a good risk, and how you’ll pay it back.
accounts, banks, finance, loans
