Local Businesses

How to Get a Small Business Loan

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Obtaining a small business loan is an important step to offset costs related to starting or expanding your own business. Getting approved for a small business loan has grown difficult in a tough economic climate. The key to convincing a lender to take a chance on you is to formulate a sound business plan and possess good credit.

Qualifying for a Loan

Lenders want to feel secure you can ultimately repay whatever money they lend you. Before a lender approves your loan, they will examine your personal financial history, work experience and training and business plan. If any of these variables raise a red flag, your loan request will be denied.

Qualifying for a loan starts with writing a business plan. The plan provides detailed analysis of your company and its goals. A business plan should include your cash flow projections. It needs to show a potential lender exactly how your company will make money, so they can feel confident you will repay the loan.

Choose a lender offering the lowest rates and best services for financing your business. The Small Business Administration is a great resource for finding loan information. Additionally, you can check your local banks or credit unions and compare rates and services they offer.

Get your finances in order by reducing or eliminating outstanding debts before applying for a small business loan. Massive debt will scare away potential lenders.

Obtaining a Loan

Banks and credit unions are still the best places to obtain a small business loan. They offer the lowest rates and are reliable lenders. Getting a loan through this avenue requires a small business to show past profitability and demonstrate a sound plan for creating future profits.

Enlisting the Small Business Administration can aid you in securing an SBA loan. The difference between a SBA loan and a regular small business loan is that it is guaranteed by the federal government. SBA lenders place an even stronger emphasis on seeing sound business plans, positive cash flow and decent profit projections before they will consider approving a loan.

Using online lenders is a growing small business loan option. These lenders typically charge interest rates ranging from 8 to 15 percent.

The key to convincing a lender is a sound business plan and good credit