If you run a small business you will need additional funds from time to time. You can try to bring in outside investment, and this is a perfectly valid way to fund your venture. However for the scope of today’s discussion we will assume that you are planning to get a small business loan and need advice about how to go about this. Hopefully by the end of your reading you’ll have a fairly clear idea of how to go about this.
Getting Ready: First, you should prepare for your future loan needs. This involves two basic parts; first you should attempt to reduce the price you pay for whatever it is you are trying to fund. After all getting approved for a large loan is great, but needing a smaller loan is even better. Also, you should see what you can do to shore up your current expenses. Not only will this leave your company in a much stronger position in general, your revenue to expense ratio is very important when it comes to getting approved for a small business loan.
Organizing your Paperwork: Next, you must organize your accounting documents. If you’ve been paying your taxes each year by opening up shoe boxes, it’s time to get more organized. If you want to do this yourself there is some powerful business accounting software, which you should research online, this of course means you will be spending a lot of time being an accountant and not running your company. Otherwise, you should hire an outside accounting firm. Just let them know you are trying to prepare all the required accounting documents to submit for a business loan, they should be able to help you from there.
Finding Lenders: OK so you’ve trimmed the cost of your loan, and your expenses. Furthermore, you’ve prepared all the paperwork your potential lenders will want to see. But how do you find a good match for your needs? The best place to start is to use your local small business administration. They will look over your paperwork and your business plan and find you a list of lenders that meet your criteria, and for whom you meet theirs.
Once you’ve gone through all these steps it’s just a matter of signing a loan agreement that meet your requirements. If you have any questions about the loan agreement make sure to ask plenty of questions and if there is something you feel particularly uncomfortable with you should seek professional advice before signing any loan agreements.