It's no secret that times are tough right now, and that's especially true for the small business owner looking for a loan. The good news is that the money hasn't dried up completely. Small business loans are being made on a daily basis.
It's never been more important, though, to prepare thoroughly before applying and to choose the right lender. Get things right and you'll have access to the money you need.
Start Planning Yesterday
It's taking longer to secure small business loans, so don't delay. Start your planning process as soon as you identify the need. Gather up tax filings for the past three years. Put together a professional-looking business plan, using a good business plan software program, like Business Plan Pro, from Palo Alto Software. Use your accounting software or accountant to generate a current balance sheet and income statement. Make several copies and put these together in presentation folders. Write and rehearse a solid, positive sales pitch explaining why you want a loan.
Evaluate Your Needs and Credit-Worthiness
Determine what you need to accomplish your goals. Come up with a rock-bottom, must-have amount as well as an ideal loan size. Justify those numbers in terms you can explain to potential lenders. Check your personal and business credit reports. If you find errors, correct them before applying. You probably won't have time to fix a poor credit history, but don't let errors block your loan. Some issues, such as tax liens and recent bad debts may be loan killers, so you'll need to clear those up before applying.
Take It to The BankStart with loan officers at the banks where you keep your business accounts or where you have previously received credit. Those banks already know your business, and are the best place to start. Complete application papers and present your documentation. Dress in business clothing and keep your presentation positive at all times. But don't stop there. Contact other banks and do the same. Try local community banks first. If you get multiple offers, you'll be able to compare terms and choose the best.
If you get turned down, ask the loan officer for the reasons and work on correcting those deficiencies before making further applications.
Get The Government to Help
If you strike out at the bank, go to the
Small Business Administration, and check into a guaranteed SBA loan. Their web site is a treasure trove of information and can lead you to SBA lenders in your area. They also have special loan programs for veterans, disaster victims, and other specific business owners, and even offer micro-loans of up to $35,000 under the current Economic Stimulus Plan.
Investigate Other Options
Other sources for business loans may be your best alternative if the ones above fail to fill your needs.
