Bank loans involve stages of paperwork to finally get an approval. Issuance of loans are not limited to banks. There are several other financial institutions that can offer a certain loan amount to small business owners, usually within the range of $1000 to $300,000.
Some of these organizations have streamlined the approval process to reduce the level of protocols and paperwork to a simple online application. Loans can now be approved in little than 2 hours or 2 days. Credit scores or credit history are no longer a hinderance to acquiring a business loan. This way you are not losing time when establishing or operating your business.
These four tips will help you to secure the loan you need for your small business:
1. Look at various financial organizations
Do not limit your search for a financial provider to just the local banks. There are other financial institutions that offer small business loans and flexible payment options. Approvals with some of these financial institutions can be completed within 24 hours with an application and the essential supporting documents. Make a list of all these financial institutions and compare their offer. The list will help enormously in narrowing your options. Select the one best suited for your business needs. Most importantly select a financial institution that will be flexible with payments so that you need not worry about the loan payments and focus more on your business growth.
2. Prepare an irresistible business plan
The first impression counts. Ensure you have a solid business plan prepared with accurate financial projections. The business plan offers the financial provider a clear understanding of the business, its functions, goals and future financial stability. Prepare the business plan in a way that it is difficult for the approver to resist. The approver is inclined to review your cashflow statements. These statements should be accurate and realistic. A well written and thought through business plan provides the lender confidence in your abilities and the future of your business. Be prepared to answer questions on how you will utilize the loan for your business. Ensure all financial statements incorporated in your business plan is accurate and provide a good insight of your financial position in the next 2 to 3 years.
3. Find out if you qualify
Before attempting to approach the financial institution of choice, review their acceptance criteria. Acquire the necessary credit reports to support your application if needed. However, there are many financial institutions that do not need your credit report and based it on sales history or ability to pay back the loan. Be prepared to explain how you will ensure your business makes money and any contingency plans you have in place. Carefully review your cash flow statement and determine the reasonable amount you can comfortably afford to pay back. Seek expert advice if needed. Review your financial statements with qualified accountants so that they can confirm your approach and projections. This offers credibility to the lender.
4. Ask for the right amount
You will be surprised to know that a business can successfully operate with minimum capital. When preparing your financial statements, examine how the bank loan will help to carry on your business and support your day-to-day operations. Keep in mind the buffer and contingency for your business. Don’t rush into the loan application until you have completed a thorough analysis of the funds you require. When the loan is less, it becomes easy to pay back and you will have more financial freedom. Before you apply for the loan, ask yourself why you need the loan. The loan purpose is important to the lender, so make sure your request appears reasonable.