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Acquiring a Small Business Loan
For a beautiful and flourishing plant which bears flowers and fruits, you need to begin by sowing
a seed. Similarly, for a prosperous business you need to start by investing in it. The first
investment for most of us comes from some financial institution. Banks are still the most trusted
place for your small business loans, they offer you lower interest rates compared to the other
options and they have an established reputation in the market. There are a number of parameters
that you should keep in mind to gain timely loan for your venture.
Select the Right Lending Institution – To select the right lending institution you must expand
your search to local, regional and national banks, online lenders, private loan lenders etc. You
have many choices available on the internet today like Individual/Private lenders or Small
lending companies. Discuss your options with family and friends to gain referrals. Your personal
or family bank may prove to be a good starting point as you already have built a good history
with them. Small Business Administration (SBA) is the right guide for you where you can get
the list of the target banks who will most likely be interested in investing in small business.
Small banks are more flexible in their terms and conditions and hence are a viable option. After a
thorough research you should select a fine partner who will offer you the best deal.
Prepare a Detailed Business Plan – To entice an investor you should chalk out a very strong
and detailed business plan. Outline your current and future business goals along with a sound
business purpose which reflects your committed business aptitude and attitude. You must
convince them about the optimum strategies that you are going to use and the way you are going
to make profit from the money they are investing. You should be updated on the latest trends of
your industry and the current economic conditions. The other criteria which are taken into
account are the educational qualification, experience, track record and impeccable references of
the business owners. Business profit in the past and plan layout for future profits is the crunch to
impress investors. Start-up venture proposals are most difficult to crack and require tremendous
market research. You should be able to convincingly satisfy every query of your lending officer
and elaborate and clarify every point.
Present Your Credit History – Cash flow is an important aspect of consideration for the
lending institution. Your personal and business credit history is the baseline of qualifying for the
loan. Actions speak louder than words, hence your personal transactions and financial practices
(such as non-defaulters) will reflect your character in business. As investors, they are mainly
interested in evaluating your capacity to repay the loan. If you have some personal liquid credit
to start your venture, it can be used as an important leverage for the lender to analyze the reduced
risk factor for investment.
Offer Collateral – If you are going to offer your personal assets, property, stock etc as collateral
to obtain loan, this helps you in securing the loan quickly and easily. The lender has an added
security factor while investing in your business, encouraging him to invest a large amount in the
business. However, offering your house for business loan should be your last resort or
Approval of Your Business Loan Proposal – The last step towards obtaining the small
business payday uk loan is filling out your loan proposal. You should fill your personal and
company information in detail, including the business structure, ownership, location, future,
customers, suppliers and the overall turnover. You should honestly outline your financial
requirement, your investment plan and your repayment plan. You should provide the bank with
the financial statements in an organized fashion; income statements, balance sheets and business
license for existing business, realistic and conclusive projections obtained from research for
start-up ventures. Remember to evaluate your exact credit requirement; the smaller the amount,
the faster approval you will get.