Contrary to many headlines, the business loan is not dead. Although all businesses require cash to operate, often, their current sales and customers provide sufficient funds for operations. However, generating the funds needed for expansion usually come from one of two sources: Investors or business loans.
As most small business owners are painfully aware, finding outside investors for startup or expansion needs is challenging, if not impossible. Business loans are the primary source of funding for small company expansion. Although the recent recession has reduced some commercial financing availability, a company needing a business loan can find one with reasonable terms. Here is how to do it.
Write an expansion business plan that makes sense. Contrary to popular belief, business owners need not produce a 100-page “slick” major novel of their cutting edge plans to expand. They do need to present lenders with concise, clear and reasonable details of the components of their plans to expand their business. Make sense; do not blow smoke.
Prepare current financial statements. At a minimum, create an Income Statement, a Balance Sheet, and a Cash Flow Statement. Once again, they need not be the work of a famous, international CPA firm. Business owners can self-create or use a local accountant to prepare clear, understandable statements for business loans.
Assemble pertinent business documents. Common paperwork includes Articles of Incorporation, business licenses and insurance information. Most loan officers will request these, along with other company-specific documents. Extra tip: Be highly responsive to lender requests for business documents as delays in submitting can only hurt your financing request.
Almost forgot. The company also needs to actually apply for a business loan. While many banks remain conservative commercial lenders, there are numerous other financing sources actively seeking to make business loans. Small companies should find the business loan they want by investigating lenders, terms and types of loan offerings. This is no time to be shy and retiring. Go for it!
To apply for funding for your small business, use the form on the right to begin the application process.