If you’re thinking about taking a loan to build your business, there are several qualifications that banks and investors normally expect from you, as the owner, and your business. Before you apply for a loan, make sure that you can provide potential lenders with the following:
- Business plan
- Balance sheet and income statement
- Cash flow projections
- Profit and loss reports
- Personal financial statements for all business partners
- Credit report
- Personal income tax returns
- Information on business debts
You may want to investigate banks that have a history of offering loans to small and growing businesses, since there are banks and credit unions across the country known for being friendly to small businesses.
It’s good business practice to have a strong relationship with a bank or banker, especially since she or he could help you get loans when you need them. If you don’t use one particular bank, you might want to open a business banking account or secure small lines of credit before applying for a big loan.
All potential lenders will probably ask how much you are investing personally in your business venture. Among other things, it’s a way to assess your commitment to the business
Among other things, it’s a way to assess your commitment to the business.
Since 1993, the Small Business Administration (SBA) has extended Microloans to businesses to help finance machinery, office space leases, equipment, and other basic necessities.
The most you can borrow with a Microloan is $50,000, and the average amount that borrowers use is about $13,000. Although the term of the loan depends on what you’re using the funds for, and the size of the loan, the longest term for a Microloan is six years.
The SBA can also help you create a loan package and secure funds through a program called Lender Match. You can qualify for the loan if your business qualifies based on SBA standards.
For more information, go to SBA.gov.