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Getting a Loan for Your Business

[Jun 17, 2010.]

 

It isn't easy to get approved for a loan when you are running a business. Just having a good idea and ambition to be an entrepreneur isn't going to make a bank hand you a business or personal loan. But there are some things you can do to improve the chance of getting approved for a loan.


  1. Have a solid business plan. Just saying that you want to be in business isn't the same as putting together a comprehensive plan for how you intend to make money. Your business plan should outline your goals for the business, as well as how you intend to meet them. Put together a business plan even if you are not a start-up. If you aren't sure what should be included in a business plan, visit the Small Business Administration Web site for guidance.

  2. Get all your documents together. Among the paperwork you can expect a lender to ask for are financial statements, cash flow statements, and tax returns.

  3. Offer something as collateral. Maybe you have a valuable collection, boat, or some other property that may make you a more attractive loan application. Be cautious about using your home as collateral for a business venture because you need a place to live regardless of whether or not your business is successful.

  4. Be specific about what you need. Do market research ahead of time so you have a realistic idea of how much money you need to borrow. Loans come in all sizes, and you want to make sure you ask for enough money. Be prepared with specific answers about the amount you need to borrow, how you plan to use it, and how you plan to repay it.

  5. Be professional. Dress the part of a business owner instead of walking in wearing an old T-shirt, shorts, and flip-flops. Whether it is right or wrong, people judge you based on appearance. Do not use inappropriate language or make off-color jokes.

  6. Cultivate a business relationship with a lender before asking for any loans. Open checking and savings accounts or a certificate of deposit with a bank or credit union before you actually need a loan. If a lender sees that you have a stable history of doing business there, it may be more likely to loan you money.


Are You a Good Risk?

Getting a loan can help you start up and grow a business. Show that you are a good risk and are willing to work hard at growing your business in order to pay back money borrowed.

 

About Author:

Francine L. Huff is a freelance journalist and the author of The 25-Day Money Makeover for Women. She has appeared on a variety of TV and radio shows.

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