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How to get a Business Loan?

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Eventually I would like to own my own business, so I thought it would be good to research “how to get a business loan.” This article covers all the steps needed in order to get a business loan. The six major steps to get a business loan are the criteria banks look for in making small business loans, the information the applicant will need, how to set yourself up to make the application process easier, what the average business loan is, how to get financing to start a business, and are there any other associations that can help start a business.

The first step “what criteria do banks look for in making small business loans” goes over the basic criteria for most banks. Every bank is different with what they look for before granting a loan but some basic things all banks look for is that the business loan is going to be used for a business, and the business must be eligible based on size, use of the loan proceeds, and what the nature of the business will be (no lending out, no gambling, etc). They also look into credit history, making sure the applicant has good credit, and that the applicant will be able to pay the loan back. The second step “what information you will need” outlines all the information you will need to have before applying for the loan: business credit history, personal and business financial statements for current and start up businesses, a well put together business plan, and personal guarantees from all owners of the business.

The third step discussed in this article is “How can you set yourself up from the beginning to make the process easier? (i.e. accounting systems, etc.).” The main three things to keep in mind with this step is to be prepared, be honest, and be thorough. You should be careful and do research where you plan on getting your loan from (large banks don’t like to give out small business loans all the time), look into community banks and credit unions, speak to a lending officer and find out what information they need, and be thorough and bring all documents/paperwork.

The next step discussed is “what is the typical size of a small business loan.” This step is important to keep in mind so you can plan out your budget realistically. On average a small business loan is between $130,000 and $140,000 with a maximum amount of $250,000. When someone is starting up their business they should keep this in mind so they can plan accordingly. The fifth step discussed in this article is “ How can you get financing to start a business since many banks want to fund growth?” Start up businesses can be the most difficult kind to get a loan. A lot of people who starting a business usually get funding through friends, family, and credit cards. A useful thing this article talks about for start up businesses is SBA assistance. You can go online to the SBA’s website where they will provide a bunch of information on how to get funding for starting a business, and other assistance as well. Finally, the last thing talked about in the article are associations that can help with small business funding. These associations are SBA District/Branch Offices where there is at least one in every state, SCORE (300 branches in the country), SBDC’s (900 locations in the country), and WBC’s (100 locations in the country).

Before reading this article, I didn’t know how hard it is to actually get a business loan especially for a new start up business. For someone that plans on starting a new business, I would highly recommend them reading this article so they could try to find other assistance other than just a major bank, so they are more likely to get the funding that they need in order to start their business.

 

1 Comment

One Response to “How to get a Business Loan?”

  1. patric on March 29th, 2017 2:00 am

    the information is very interesting, Thanks You
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