Let’s face it, if you don’t have excellent credit or an established business, it is difficult to get funding. The high risk factor associated with small business startup loans, are the main reason why most financial institutions and banks to stay away from start up businesses.
However, there are banks and financing organizations eager to work with start up businesses. Its up to you, the business owner to get all your paperwork in order and present yourself and your new business in the best light possible. You want to try to make your small business start up loan request look as low risk as possible.
Following hints might make your application irresistible for other institutions or banks.
- Get your finances in order!
- If you have credit problems, take the time to correct or if possible remove any inaccurate information. Companies like www.creditrepairhelp.com can help you improve your score quickly. For most consumers they start seeing a credit score increase in 45 days.
- Create a business plan. For SBA loans this is a must. If you are just applying for an equipment lease, you generally just need and executives summary and the owners resumes
- Create a financial projection spreadsheet. This generally consist of :
• Estimates of your income and expense
• Working capital estimates
• Cash flow statement
• Proposed Balance Sheets
• Details on how the loan will be used
Don't think you will just walk into the bank and drop your business loan package on the lenders desk or fax it over to your financer. Expect them to have a lot of questions and you neeed to be prepared!
This is where you really need to be able to convince your lender that your business will be sound. Projections are great, but they are just projections. You need to be able to back up your projections with how you got to those numbers. Just recently we had a client approach us for a $100,000 small business startup loans. After reviewing his loan request we had several questions. His numbers made no sense. From the amount of the loan needed (to set up an office, $100,000! With only 2 employees (himself and his wife). It all seemed like about $5,000 in equipment and $95,000 in marketing and soft cost.
He couldn't really justify his numbers and his appointment lasted all of 20 mins! And most of that time was spent telling him he wasn't a fit for our bank. Don't be like that guy! Walk into your bank or chosen financial institution w/ numbers that make sense! My manager wanted to basically give this guy the "bums rush" out of the bank. But I tried to point him in the right direction and tell him where his loan request "fell apart" but he was to wraped up in his vision to listen or take advice.
If someone in a position of power takes the time try to help you, listen! Don't talk over them, or try to convince them that your start up business with no clients, no marketing and no "brand name attached to it" will make $10,000 a month starting month 3. If you are going to say something like that, have something to back up the claim!
And lastly don't forget that first impressions count! If you are going to appear before them in person, make sure you are dressed in a professional manner. Think of it as a job interview! All the loan files must be typed; handwritten documents appear unprofessional. If you have followed the above steps you are well on your way to getting your loan approved!
Related Post: Tips For Applying For Your Small Business Startup Loan