Small businesses provide 75 % of new U.S. jobs and therefore, are the backbone of our economy, Where’s the money to finance them? The Banks and other Institutions in America today have lots of money that they could Loan to worthy right now – to help grow America.
Topics: Credit Score, Fixing, Prepare, determine Needs, Executive Summary, Business Plan, Ask for help, get Ready, Contingencies, Hidden Fees.
So, you want to expand your business to live your entrepreneur’s dream. Growth takes capital, and that often means Finding Funding by securing a Small Business Loan. The money is out there. But to boost your chances for success, you’ll have to figure out how to show that your business is robust to a Bank.
In the end, it’s all about money, but in the beginning, it should be about planning,” says the, District Director of the San Francisco branch of the Small Business Administration (SBA) . “Without preparation, small business owners often get turned down for a Loan.” Here are 10 steps you can take to improve your chances of getting a small business loan:
1. If you don’t have good Credit Score (<700), wait to apply until you’ve improved it. How? Banks, Credit Unions, & Online lenders set their own criteria for approving a business loan, but all of them are trying to answer one key question: What’s the “risk” of doing business with you? Expect any lender to check both your Personal & Business Credit Records. If they are low (<700), raise them by “paying down” Credit Cards and other Debt and settling any Liens against you or your business. (so they don’t lean on you anymore.
2. Fix any Errors in your 3 Credit Reports, if you need to raise your score. Be aware that Credit Bureaus have up to 30 days to resolve an issue, so wait until the bureaus resolve the dispute to apply for a Loan.
3. Start the Loan process early. Apply for a Business Loan well before you need it. Loans guaranteed through the SBA typically take 45 to 60 days for approval. And it may seem counter-intuitive, but apply for a loan when your business is thriving: The sad reality is that it’s hard to get funding when you’re having a rough time.
4. Estimate how much you want to Borrow in advance. The worst thing you can do is go to a bank and ask, ‘How much can I borrow? You should know: 1) exactly (as possible), how much you need, 2)exactly how it will be used & 3) exactly how it will be repaid. That way, they know you’ve done your homework.”
5. Start with an Executive Summary. It’s the first section of a Business Plan and is generally considered the most important. Typically 1-2 pages long, it covers the highlights of all the other sections of the Business Plan – to you’re your potential Funder’s attention. If you’ve done one before update it.
6. The Role of an Executive Summary * In a Business Plan being used to pursue funding from Banks, Venture Capitalists, or Angel Investors, an Executive Summary is designed to captivate the attention of the reader – to see the opportunity available. Its goal is to provide enough information that the reader will want to dig in and read all the specifics within the Business Plan itself. It is not an introduction to the Business Plan. You do not want to write an executive summary that is a lead-in to the plan as a whole. It needs to be more of a attention getter to get to the next step – where they ask for your Business Plan. * Peter/CXO Wiz4biz has written > 30 Exec Sumry’s.
7. Make your Business Plan short (cause who wants to read a long plan?. You may have the best idea in the world, but you’ve got to convince the Lender that you can pay it back. Your plan will: 1) lays out exactly what your company does, 2) how it will make money & 3) why customers will pay for it. In addition, discuss your Market opportunity and the Competitive landscape (and of course, why you have an advantage). Have a summary of your Team (ie to particularly if they’ve worked in startups before) It’s ever better, if you have worked with all or a big part of your Team before. Also describe your Business Model and your costs (salaries, rent, equipment, etc). Finally, attach 2-3 years’ worth of Profit/Loss statements, balance sheets, and cash flow statements. If you’ve done one before, update it. If not, check out sample Business plans from bPlans, LawDepot, RocketLawyer or go do a search on this.
8. Ask for Help. Even though you’re used to working for yourself, you can really benefit from advice from people who’ve been there. Before you apply for a Loan, ask an SBA employee at your district office to sit down and review your file with you – to make sure you have everything you need. Besides its district offices, the SBA offers coaching through its Women’s Business Centers and other offices tailored to minorities.
9. Get your Documents ready. Your Lender will want to look at a few years of business Tax returns, your legal status & your debt-to-equity ratio (the amount you owe creditors divided by the financial value of your business. Be accurate.
10. Prepare for Contingencies. Lenders want to know you can pay back the loan by selling off assets, even if the business fails. “If you have any assets that can be used as collateral, it is important,” The lender wants to see that you have “skin” ($$$) in the game.” For collateral, try to stick to business equipment and assets other than your home.
11. Don’t get Discouraged. A doctor’s medical practice may likely find it easier to secure a small business loan for expansion than, for example, the owner of a Restaurant. It’s all about risk. Restaurants have a statistically higher rate of failure than most business ventures. If you own a restaurant and you run into obstacles with the bank, consider pursuing a loan through a non-profit Lender or Community Development organization.
12. Be wary of Hidden Fees.
If you need cash in a hurry or have “bad” Credit, you may want to look into online or alternative lenders. To avoid getting stuck with high fees, have your Attorney review the contracts. (ie, steer clear of Payday loans that charge extremely high interest rates — sometimes triple digits) Another for m of lending – Merchant Cash Advances are repaid with a portion of Credit Card receipts, which can eat into your business’s Profit margins. Finally, he advises all business owners to ask the lender the loan’s APR (even if the interest rate seems reasonable). “Just to give an idea, bank loan APRs are currently around 5 to 8 % and alternative business Loan APRs are around 40 to 60 %.”
Best Sources for Small Business Loans
#1. Wells Fargo Bank, #2 Live Oak Banking,
#3 Huntington National Bank, #4 JPMorgan/Chase Bank,
Comments: Do you know any other Ways to improve your chances of success for your Small Business.
from SalesForce.com 26 Jan 17 enhanced by Peter/CXO – Wiz4biz
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