How to get a business loan

Money makes the business world go round. Obtaining a stable and fluid source of finance is an important factor, whether you are planning a new business or growing an existing one. There are many new entrepreneurs who are intimidated by the task of obtaining a loan and don’t even know where to start.

Here’s a handy guide on preparing yourself and your business idea as you successfully apply for and obtain a business loan.

1. Know the criteria that banks look for to make small loans. Different banks and lending institutions may have different standards, but in general, when you apply for a business loan, you should have been able to meet the following criteria for them to consider you:

• Your loan is for a sound business purpose. For example, the business must be eligible based on size, use of loan proceeds, and nature of the business (non-lending, speculation, passive investing, pyramid sales, gambling, etc.)

• You and your partner(s) are of good character, experienced, and have good personal and/or business credit history

• You have the ability to repay the loan. This could be in the form of collateral or a personal capital investment in the business/in-game skin.

2. You have the basic documentation to present. You will need the following documents. Different lenders may need more or fewer of these.

• Personal and business credit history

• Personal and business financial statements for existing and new businesses, as well as projected financial statements

• Strong and detailed business plan (including personal information such as biographies, education, etc.)

• Cash flow projections for at least one year, and

• Personal guarantees from all principal owners of the business

3. Research on banks and credit institutions. Before you approach lenders, educate yourself on commercial lending, such as bank accounting systems, so you can argue intelligently with loan officers when the time comes.

• Choose your bank and lending institution carefully; one that would follow his business sector.

• Reach out to those you have worked with or are clients of

• Check out community banks and credit unions

• Be thorough, bring everything you are asked for. Many loan applications are denied or face unnecessary obstacles due to incomplete applications.

4. Identify the amount of the business loan you want. There is a typical size for small business loans. There are some business loans that average £100,000 to £200,000. This largely depends on the financial needs of the company and the size of the company, for example, from a start-up of a sole proprietorship to hundreds of employees.

5. Have a good business plan. Getting a business loan for a new business can be more difficult as many banks want to finance growth. Many new businesses seek financing from family, friends, and credit cards. However, you may have a better chance of successfully obtaining a business loan if you have a solid business plan and reasonable credit for the loan.