Whether you are planning an expansion, improving your existing small business or just starting a business, a small business loan can give you the necessary financial support. Not all businesses can get small business loans, so you have to be very careful when applying for one. Making sure that everything is as it should be and placing your company in the best possible way will improve your chances of obtaining the loan.
1) Get a copy of your credit report to make sure it is correct – you can even get a copy of all the credit reports from the companies in your country. Most financial institutions go to your credit report while reviewing your loan application.
2) Ask the financial institution through which you want to get the small business loan for a full list of the documents needed to apply for the loan. Also ask the additional information that the borrower requests for your loan application. Each institution has different requirements for small business loan applications.
3) Collect the financial documents and the information you need.
- Borrowers can ask for a business plan, business history information on leased properties, the number of owners who have invested in a small business, personal financial statements of the owners, flow projections of the home and CVs of the business owners.
- Other information that may apply includes the three-year financial statements, accounts receivable and payable and the calendar of debt.
- If you are going to open a business, you may need to provide the projected balance sheet of the opening day.
4) Write out a loan that contains the exact purpose of the loan and the exact amount you need to borrow. Again, every institution has its own requirements, but a few extra requirements can include brief biographies of all individuals in administrative posts, a discussion of the techniques of marketing your company and the market position and legal structure of your company.
5) Establish a meeting with a small business consultant at your financial institution and bring together all the information and documents you require. At the meeting, review the documents with the consultant to ensure they are in order. Although it is an optional step, it can be a good idea if you have never applied for a loan.
6) Submit the application and all supporting documents to the correct person or address.
7) Waiting for the news from the financial institution.
8) If a borrower rejects your application and you are in the US, ask him if he can offer you a loan under the Small Business Management Guarantee Program. With this program, the SBA guarantees the loans that the financial institution could not grant. If the financial institution can do so, give permission to send a loan request to the SBA, which will fully review your application. If you qualify, the SBA will contact the borrower. Then you get a loan from your financial institution.
9) If the borrower rejects your application and you are located outside the US, ask your financial institution what options you have available.