Mon 4 Jun 2007
It requires a lot of perseverance to establish a prosperous business — and if your business is still in the beginning stages, you may find yourself in a position of being short of financing and having to apply for a small business loan.
No matter what your business does or sells, in order to be successful in securing a loan for your business, you have to show that your business fills some unmet need in the market. If you don't do this, then you have little chance of getting the loan; this is because investors want to make sure that your business will be profitable and that they will get their money back.
Getting a small business loan does require some work on your part, but it isn't impossible. Here are some tips that you need to follow if you want to secure a small business loan:
Avoid Making Common Mistakes
Don't go into business haphazardly. You have to show that your products and services are relevant in today's market and have the ability to sell. This has to be clearly spelled out to investors, with no room for ambiguity — they want to know that their money is safe with your business.
Have a business plan. This shows that you are organized, serious and that you've put a lot of thought and planning into the business. Investors and banks like to see a plan, especially with the numbers, spelled out on paper. Don't make the mistake of showing up without a business plan. If you don't think you can write an effective plan or simply don't have the time, then hire someone to do it for you. It will be well worth the effort.
Know What You Are Doing
It is essential to know where you stand in the business you intend to start. Knowledge is often considered to be money in the bank — after all, if you have the right knowledge and credentials, and your employees do to, this signals to potential investors that the management team is strong and has the knowledge to run a successful business.
Applying for a small business loan is a serious undertaking — and often you only get one shot to be successful. You can maximize your chances by being well-prepared and following the tips above.