Business loans

Business Plans

Access to capital to start a new business is an extreme challenge  given the current economy.  To enhance the ability to get a business loan the following tips and comments may be of help. The current economy has caused many financial institutions to pull in their horns and only look for what they believe to be high quality deals.  Unfortunately for many new budding businesses they never get past the initial steps for success.

Before you start applying for a loan for a new business you need to investigate the worth of your idea. Questions you need to ask your self include; Do I have the ability to run a business?  Do I have related experience?  Do I have the personal financial backing and credit rating that will be an all important part of my project?  Is this a business that is needed in the community?  

Once you have answered the above questions and you wish to move forward you will need to find a location, suppliers, insurance, marketing assistance, training if available and the biggest item of all, finding a loan from one or more of many lending sources which include banks, credit unions, finance companies, area Economic Development Corporations or angel investors.

In order for a financial institution to consider your request you will need a business plan.  A well thought out professional appearing plan will be the key that will unlock the door for your application to be considered. A business plan is nothing more than a story about your proposed business.  It needs to include  important areas such as who, what, why, when and where.  It must be concise and to the point.  The hardest part of any plan is preparing projections including assumptions used.  Assumptions must be based on fact and not on wishes.  Since this is an all important part of your plan it might be a good idea to secure help in this area from someone with a financial background.  Remember that what you present must be reasonable and logical.  If you do not know how to prepare a plan you should invest some time exploring local resources for assistance.  One example would be talking to area Technical Colleges.  Many offer E-seed classes for business starts which include the all important planning stage.

Preparing for the initial interview with a lender is extremely important.  Knowing your project inside and out will show that you have a handle on where you are headed.  Be sure to use proper language and never discredit others including competitors.  Always be polite with a clean neat appearance.  The first words out of your mouth should never be "How much can I get".  During my several years in the financial industry this phrase along with running down the competition has raised immediate red flags.  Don't get caught up in that trap.

If you are asked questions don't be offended or alarmed.  The person you are talking to needs to learn as much about you and your business in a short time.  Ask them for recommendations or suggestions if they question certain areas of your presentation.  Ask if there are other loan programs in the area that might consider assisting you on your project. This demonstrates a willingness to learn and work together.

Finally never be offensive to the lender if you are turned down.  Ask for reasons why and to see what you can do to make a difference and possible gain approval.  If that does not work do not tell them off.  Remember, "The toes you step on today may be attached to the posterior you have to kiss tomorrow".

Good luck with your project.  Be polite, study your project and leave no stone unturned.