How To Apply For Small Business Loan
"How to apply for a small business loan," seems like a difficult question, but with a bit of knowledge and time, it's fairly easy. If you are looking to start a new business, you may need to apply for a small business loan. This is normal because most people do not start a business without a small business loan of some kind. The question becomes how you obtain a small business loan.
- Know the reasons that you need a small business loan. This is an important issue to address especially in a new business. When you apply for a small business loan, you have to be clear about the amount of funds needed to establish the business. Not having a purpose for the small business loan might affect your ability to receive a small business loan.
- Seek Professional advice. Obtain advice from knowledgeable business entrepreneurs such as the SCORE chapter in your area. SCORE is a non-profit group comprised mainly of retired business executives who provide free advice to small business owners. Most states have a local chapter but if you do not, you can visit their website.
- Contact the SBA. The SBA is the Small Business Administration, and they provide a wealth of information on small business loans as well other information. They can help you with your small business loan application whether you are a new business or an established business. SBA offices are available in most states and U.S. territories or visit their website for information.
- Review your credit score. Before you apply for a small business loan, you should take the time to review your credit history. Do this by requesting your credit report from the three major reporting credit agencies. The three credit reporting agencies include Transunion, Experian and Equifax. These reports are available to you annually free of charge. If there any incorrect information, write them a detailed letter along with documentation to support your claim. They are required to correct the incorrect information within 30 days. Check your credit score, if your credit score is low, your chances of obtaining a small business loan is difficult, but you will not know unless you check.
- Think about your loan borrowing options. There are many places to obtain a small business loan. Look at major banking institution in your area, and do not rule out smaller banks. Your local credit union is a good source to obtain loans also, and sometimes their interest rates are more favorable than banking institutions. If a lending institution rejects your application, do not give up. Keep looking for other lending institutions to apply for a small business loan.
- Prepare your business plan. When you apply for a loan, the lending institution wants to see your business plan. A business plan helps you ascertain the loan amount you need and the period to repay the loan. The business plan is generally in addition to your loan application. If the loan if for an established business, you should include in the business plan past years financial statements as well as your projected financial statement. Some banks may require a statement of collateral that is if you are using an asset to secure your loan.
- Meet with the Financial loan representative. Be prepared, and make sure you have all the necessary information ready. If you have spreadsheets, charts are graph to make your presentation make sure they are neat and arrive for your appointment on time.
By taking these steps to apply for a small business loan, you are bound to find a find an appropriate business loan to establish your business.