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Taking up a Business Loan

January 17, 2011 • News

Applying for a business loan is a lot like applying for a personal loan. Ultimately, bank does not want to lose money by taking too great of a risk. So, if you want to prove that your business is worth the money, you will need to be fully prepared.

First, prepare documentations as proof to the bank that your business is worth the risk. The best way to go around the documentation is to prepare a detailed and updated business plan that includes bio of you and your partners, track records, etc. If not, start by bring along your personal credit history as reference. This will come in handy especially if your business does not have a long operating history. Next, bring your business financial statements. The bank will need to know your financial health before approving the loan. You will also need to provide the bank with pro forma statement to project what your business will worth. Banks award loans those that have everything planned out as detailed as possible.

After you prepared the documentations, it is time to walk into the bank and ask for money. With so many banking institutions around with different varieties of business loans, it is difficult to choose. Save time and start with institutions you already do business with or have a personal account with. These places already have your financial information and know your behaviour. If you have been displaying financial responsibility, it is very likely they will award you small business loan. If you cannot use existing relationships with banking institutions, ask around at credit unions. These institutions are smaller and it is easier to talk to decision-makers who might pledge your case.

Working with banks on small business loans is easy, provided you have the documentations locked down to the finest detail. By doing this, you can put your mind at ease and move on to more important things.

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