Small business loans come in a wide variety of shapes and sizes, and that can be a huge help when you’re trying to grow your business, as you can likely find one perfectly tailored to suit your needs. But it also means that you need to know what your needs are and what kind of loan will be most beneficial to you.
Applying for a small business loan is an important step in the life of your company, whether you’re just getting started or have been in business for some time. The better prepared you are at the outset, the less stressful and more productive the process will be.
Getting Your Bearings
Educating yourself about the myriad of options available is the first step towards procuring a small business loan. To make matters more complicated, options can vary from one lender to another, so it’s important to choose a lender you’re comfortable with and then see what products they offer. Don’t be afraid to shop around, either. If the first lender you go to doesn’t have exactly what you’re looking for, try broadening your search to see if you can find better terms elsewhere.
Minimum Requirements
Another important step to ensuring a successful application process for your small business loan is learning about the lender’s minimum requirements for the particular type of loan you’re interested in. While there may be some latitude granted if you fall short in certain areas but exceed in others, it’s best if you can find a situation in which you satisfy all minimum conditions the lender is looking at.
Gathering Information
Once you’re ready to begin the application process, you need to gather all of the required information and organize it properly. The exact list of documents a lender wants to see will vary, but in general, you can expect to provide:
- Personal tax returns
- Business tax returns (if an existing company)
- Business plan
- Financial statements including Profit and Loss
- Balance sheet
- Personal and business bank account statements
- Business license
- Personal resume describing your business or management experience
- Financial projections
While all of these elements are important, having a solid, practical business plan is essential, as it describes to the lender what you’re going to do with the money, and thereby how you will be able to repay the loan. A good business plan needs to include:
- A detailed description of your company
- A description of the product you produce or service you provide
- Information on your management team
- Analysis of the industry
- Analysis of your company’s strengths and weaknesses
- A description of your facilities
- An operations plan
- A strategy for sales, marketing, and promotion
The Bottom Line
The main thing to remember when applying for a small business loan is that you need to demonstrate you have a clear plan for how to turn that money into profit, as well as the means and capability of doing so. While it’s helpful if you fall into traditional categories and meet specific minimum requirements, it’s not always necessary as long as you’re well organized and well prepared to make your case.
Interested in learning more about the fundamental decisions you’ll be making as a small business owner. Access our resource library to download eBooks and documents that can help you get more from your business.
