The one thing you must remember when trying to get a small business loan is preparation. When people want to know how to get a business loan, especially an unsecured small business loan, they are never prepared for the amount of paperwork and information required.
Five Pieces Of Information You Will Need
When it comes to getting a business loan, how much information you can provide is essential. Here are the five piece of information you will need:
- The business plan – this document will not only show the lender why you want a small business loan, but what the money will be used for.
- The cash flow projection – one of the first answers a lender will want is how the business plans to repay the loan. The cash flow projections give concrete financial data which can be used to assess the risk.
- Personal financial statement – this is a list of personal assets and debts, what you own and owe, which gives the lender a financial picture of the owner of the business.
- Past business tax returns – if your business is established, and has filed tax returns, you should take these with you. This helps the lender get a good idea of how financially stable the business is.
- A credit rating report – while it is not essential to have this report for the lender since they can look this up themselves, it is important that you know what this report says about you and your business.
To get copies of all of this information you simply need to go through your personal records or check with your accountant. The credit report can be obtained from one of the three major credit reporting agencies. To get a free copy of your business credit report you would simply mail or fax a request to them along with two forms of identification.
The Know-How To Get A Business Loan
Knowing how to get a business loan means knowing the information you are providing the lender. When you meet the lender in person you will need to be able to discuss the following with them.
- What collateral do you have – collateral will be the tangible assets that you are willing to put up to guaranty the loan. This could be equipment, a house or car, or inventory.
- How much money are you personally putting into the business – being willing to risk the money you have will show the lender that you are willing to work to achieve success at the business.
- What expertise or experience do you have – be prepared to talk about yourself with the lender. They will want to know about your background, expertise and experience in the field you want to enter and what your aspirations are for the business and yourself.
- Can you elaborate more on the business plan – be prepared to fully discuss the details of your business plan with the lender. Any questions they have should be answered confidently and quickly.
The chances of getting an unsecured small business loan will greatly improve if you are able to provide all the information the lender wants to have. If the lenders concerns can be properly addressed, you will have a greater chance. This is the most important sale in the life of your business.