For small business owners and entrepreneurs, extensive preparation is the key to getting the best possible business loan rates from major lending institutions.
Obtaining funding for ongoing operations and special projects is essential in order to compete effectively in the modern marketplace; business loans and lines of credit ensure that money is available when your small business needs it most.
This ready access to funding can allow your company to take advantage of short-term opportunities easily and reap the profits without excessive delay.
Initial funding loans can be vital when starting your own business as a back-up source of funds; combined with your own investment, the additional cash flow flexibility can make the difference between success and failure in the critical first years of operation.
Start out right Securing the right funding at the right rates is especially important when starting your own business; excessively high business loan rates can cripple your business and create significant cash flow problems both immediately and over the course of the loan.
It is essential to provide lending institutions with solid financial reasons to invest in your company.
A comprehensive, professionally constructed business plan can inspire confidence in lenders and ensure that your company gets the business loans it needs to survive and thrive in the marketplace.
Setting up for success One of the most important factors in the success or failure of a small business is the overall image that it projects to vendors, customers and lenders.
Separating your small business bank accounts from any personal accounts creates a more professional image for your company and can simplify bookkeeping and tax preparation.
Separate small business bank accounts allow you to track and control your company's spending with increased accuracy; this, in turn, can allow you to plan more efficiently for upcoming expenses and gauge the profitability of your company effectively.
Ongoing funding needs Even companies that have been in business for years require ongoing funding for their operations and special projects; your company will be no exception.
The business loan application process for established owners is similar to that required for obtaining initial funding.
However, because your company has already been in operation for some time, you must provide a number of materials to the lender that are not usually available at start-up.
These include financial statements for the last three years, personal credit information, and an updated and current business plan.
Typical lending requirements In general, lenders will want to see two or three vendor lines of credit, one or two corporate credit card accounts, and at least one other business loan in order to offer the best possible business loan rates.
Because start-ups typically have not established these lines of credit, it is sometimes useful to enlist the help of the Small Business Administration in finding lending institutions willing to take a chance on your fledgling company; they can also provide assistance to established companies.