If you own a small business you will no doubt need to borrow money at some point to pay for your business expenses. There are many ways to pay for these expenses including venture capital and loans. For the purpose of today’s discussion we will be talking about the small business loan process. You should have a basic understanding of how this process works and what to expect when applying for a loan for your small company by the time you’re done reading today’s article.
The small business loan process begins by crafting a business plan for your company. This is a formalized document which includes all projected costs, revenue, expenses, profit, etc. if you require assistance in formulating this document I recommend that you contact your local small business administration office for further assistance. You can have a consultant from the SBA sit down with you to discuss how to best go about establishing your plan. This is an important step not only for obtaining funding through loans but is also very helpful for you and scene where perhaps you have miscalculated your future expenses or perhaps where you can cut your future costs. Once you have your business plan you want to move onto the next step in acquiring a loan.
The small business administration is also very useful in helping you obtain a loan once you have your plan. The next best step in the small business loan process for most small business owners is to continue to coordinate with the SBA in assisting you in finding an appropriate lender. You will most likely have a list of lenders to choose from and you will want to go with the best option which will approve you for a loan. There are certain specialized criteria for small business loans which do not apply to standard loans. For one there are exceptions made for companies with less revenue or with less business history as it is understood that small companies do not yet have this. Once you are in contact with a few of the lenders which you feel comfortable with this move this onto the next step.
The final step in the process is to gather all of the required documentation and submitted to the lender for approval. Some likely documentation that you will be required to furnish will include your accounting statements which demonstrate your past expenses and revenue. You may also be required to demonstrate good credit history by providing access to your business credit score. Remember that your business credit score is separate from your personal score and that it must be built separately. Once all this documentation has been submitted be lender will review it and decide whether or not to approve you. This completes the list which encompasses the small business loan process.