- August 31, 2018
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Small Business Loans Top Five Requirements
So you have decided you need to obtain additional financing for your business. You may be feeling a bit overwhelmed about going through the loan process. What to expect, how does it work, what will they want from you and what are the chances of even getting them to give you the funds you need for a startup business, build your existing business or even just get you through a rough patch even though you see clear and sunny skies in the near future. Take a deep breath and exhale slowly. The process may seem complicated, but once you look at the requirements and see them as individual steps instead of the entire staircase of steps, it will be easier to manage.
Outlined below are a set of guides put together in an organized way for you to make the process simple and easier to follow and make your loan acceptance chances much likely to be approved. Concentrate on one task at a time and you won’t believe how quickly you’ll be prepared to send in a loan application to the business funding service of your choice. In fact, there are even business funding websites such as Prosperum Solutionswhich can help you with business funding; even with bad credit from your past.
This may sound basic, but first you need to know the state of your current credit record. Sign up with a free credit report website such as CreditKarma.com and get reports from all three major credit history companies. Yes, you do need to look at all three, since they are not identical. Set aside some time each night for 3 nights to look at one report. Stay focused and look at all the information. Pay special attention to any negative reports from creditors. Verify the accuracy of these statements. If any are false, immediately contact that creditor and find out what they will require to correct the situation and fix it. Be prepared to jump through a few hoops in the process. Document everything and keep it all together with any other information you are gathering for your loan application. Also, clear up any outstanding debt that you can and keep records about that as well. Do that with each report. Now you have accomplished a major step toward your possible business loan approval.
Next you will start to prepare your business plan. Again, this will take time and you should break it down into smaller steps that can be accomplished in no more than a couple of hours. Keep fresh and focused as you move through this. It may seem like it is going to take you too much time to do this slowly, but if done right, you will save a lot of back-and-forth discussions with any potential lender with them wanting more information, or just having it sit on someone’s desk for weeks before they even ask for the additional information. It really is worth doing this right the first time.
Step one to preparing your business plan is to pull together a detailed summary of the mission, strategies and goals of your business currently and how you can use that moving forward. Make sure you describe your business, and the products and services that your business has to offer and what makes what you offer unique or sets you apart from others with a similar product or service.
Step two is all about your business’ financial projections and what you see as growth in the future for your company.
In step three you will compile all the research you have performed that supports your financial projections. That will include market research about similar products and what they are currently selling for, who your target audience is, what their needs are and how you will be meeting those needs in a way that surpasses your competition.
Your work is paying off now. In step four you will put together a complete marketing plan that details how you will get the word out about your product or service to your target audience. What platforms will you use and how much cost are you projecting for each. This is where any research you have done about your competitors and what has been effective for them will give you and the lender needed information for moving toward successful loan approval and later business growth for you.
And finally, you need a detailed executive summary, which outlines information about all the four items listed above. It should be professional and concise. This will go at the beginning of your business plan to give an idea of the information that will follow.
Lenders want to see what you have accomplished and what plans you have for the future in growing your business. It is always a good idea to keep your business plan current. Reviewing it several times a year to update or make needed changes.
Your personal resume is an important tool to gaining credibility with business funding services. They will want to know about your employment history to determine any expertise you have acquired to help build and grow your business. Your professionalism and resume are an integral part to obtaining approval for your business loan. Remember to include present and past business colleagues and supervisors who can provide glowing references and recommendations.
A profit and loss statement is your company’s balance sheet showing financial performance over a specified period of time. The business funding service may require you to prepare a profit and loss statement for each of the three years preceding the date of your business loan application. These statements will represent revenue your business has generated and received compared to outgoing expenses. The statement also reflects fixed costs to help a small business determine its profit margin and financial performance.
Your strategic marketing plan for your small business that includes your vision of what your company will accomplish in the future. This should cover a minimum of two years. Business funding services want to be confident that you have a future marketing plan for promoting your small business effectively. Today’s viable marketing options are often encompassed within social media and the internet. You should include a plan for advertising online. For instance, advertising your small business via social media platforms such as Facebook, Twitter, YouTube, LinkedIn, a business webpage with regularly updated blogs, and advertising via email are essential to prove you are using the most effective advertising in today’s market.
Now you know what will be required for lender approval of your small business loan and the steps to compiling and organizing what you need to present a positive application for approval or pre-approval of our loan.