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Have you always wanted to start your own company? Were you planning on obtaining a business loan or do you already have capital to work with? Have you ever written a business plan before, do you know what it entails? Starting your own company can be fun and exciting, but it can also be stressful and a lot of work.
If you are prepared you will likely get approved and get a loan faster!
WHAT TO TAKE TO THE LENDER?
- BUSINESS PLANS - Many financial lenders require a well written business plan detailing how the money will be allocated, what the profit projections are, and what equipment will be used. A business plan needs to be as in depth as possible to give the financial backer a feeling that they will get their money back from the success of your business.
- CASH FLOW PROJECTIONS: Obviously your potential lender will need to feel comfortable that you will be capable of repaying the loan. Being able to provide them with a projected cash flow statement will give your lender an idea on the time it will take you to repay the loan.
- PERSONAL FINANCES: You individual tax return and credit report will also give your financial backer an idea of your financial responsibility. The higher your credit score and having a low debt to income ratio, are just other positive things that will get you one step closer to getting your loan. All of these positive factors tell the lender you are responsible and a low risk.
The lender will always have many other questions for you. Just remember that their main concern is if giving you the loan is a good investment for them.
1. Do you have collateral or assests that you can use to secure the loan?
- Your residence
- Equipment
- Stocks, mutual funds, or bonds
2. Can you afford to put your personal money into your business?
- Do you have money saved in your personal savings accounts that you can invest into the business?
- Do you have any family, friends, or investors that would be willing to provide you with a gift or loan to help you get started?
- Can you cash in SOME stocks, mutual funds, or retirement funds to help you get going?
3. How much experience and knowledge do you have of the business that you are starting?
- The more knowledge and education that you have in regards to the industry you are entering, the more your lender will feel confident that you will be successful in the long run. This will help the financial backer feel confident in your ability to stay profitable.
4. I have prepared all of the documents I need. Is there a particular financial institution that I should go to first?
- Start by going to the bank where you do your checking and savings, and have built a good repor with. Having a good track history with their company may also help you throughout the loan process because you have established a positive history with them. You can always shop for better rates, but if it is not a huge difference, it may not be worth going elsewhere.
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