Even in these somewhat financially challenging times, a business loan can be obtained by using a sound strategy and smart outlook. If someone is trying to launch or expand their business, there are a few strategies to consider before seeking financial support.
Create a Strong Business Plan
When seeking financial assistance to pursue a business goal, be ready to present a solid, fundamental business plan to potential financial lenders. Try to incorporate as much detail as possible. Ideally it should include:
- 3-5 year business plan showing a previous record of strong profitability
- Current and projected sales numbers
- Cash flow statement and projected budget
Check Both Business and Personal Credit
Business experts collectively agree that it’s crucial for someone seeking a business loan to know their credit scores prior to applying for one. If a person’s credit took a hit during the recession, it’s in their best interest to restore it first to increase their chances of successfully securing a loan or a new line of credit.
Pursue a Bank Loan
Unfortunately, several small business owners only have one or two banks in mind, and simply give up if they’re turned down. A better strategy is being more open-minded and to research 5-10 banks that appear compatible with someone’s loan requirements and then pursue them. If a person has a business that’s creditworthy, they will likely find a bank willing to work with them.
Dream Big but Ask Small
Although a person may have lofty business dreams, it’s less likely they will secure a large loan over a smaller one despite their collateral or number of assets. It’s better to think small and build from there. Short-term gains are safer and more doable.
Check Out SBA Loans
The Small Business Administration (SBA) can provide loans using third-party financial lenders such as banks and other community development institutions to assist in identifying additional venture capital resources. Different SBA types have various eligibility factors and requirements. In general, a business must have a reasonable amount of invested equity and illustrate why they need the loan as well as no prior history of negative or delinquent debts owed to the government. Those businesses which are significantly involved in religious education, life insurance, or legal gambling are automatically ineligible.
Look into Peer-to-Peer Lending
Another possibility is to look into peer-to-peer lending as a financial source other than traditional banks or high-interest cash advance lenders. If a person’s business doesn’t meet the criteria to obtain a bank loan, peer-to-peer lending can offer a short-term, practical option, assuming a person is able to verify business-associated collateral or a personal guarantee. Interest rates may vary; therefore completely understand the terms before committing to the loan.
If you are in need of a business loan, Rescue 1 Financial offers business loans to start a business or get cash flow to cover your monthly bills.