You are Here:
Home > I
am The Boss! > How to Get a Business Loan in Five
Steps
How to Get a Business Loan in Five Steps
by: Dave Miller
Need funds to startup or expand your business? Follow these steps:
A lender looks at a loan request
in three sections known as the "three
C's".
They are:
- Credit: Did you pay previous lenders back as contracted?
- Capacity: Can you afford to pay back this loan?
- Collateral: If you don't pay back the loan from what asset can
the lender recover their principal?
Government
Grants for Women - Click Here!
Free Government Grant Money For Women Only! Grant money for Business, Education,
and Personal Needs! Apply Today!
Step one is:
1. Identify your strength and
weaknesses in the "3 C's".
Do this as would a lender - with a very critical eye. Identify your
loan to value ratio and your debt service coverage ratio. If you
have reason to believe that you credit is less than sterling, get
a copy of your credit report including your credit score
Each lender has different criteria
with the cost of the loan being higher as your strength in the "3 C's" is
lower.
Step two is:
2. Identify lenders who lend to your level of borrower and to your
industry type. Call lenders to get their criteria. Learn about the
SBA 504 program and 7A loan guarantees. Find who others in your industry
have used for financing.
If there is a gap (not a canyon,
just a gap) between your borrowing ability and
lenders criteria, a loan broker may be able to help. They spend their
working
hours finding second and third tier (more aggressive and more expensive)
lenders and establishing relationships with them. They can act as
a salesperson for your project in ways that you as a principal cannot.
Step three:
3. If you cannot find lenders on your own, consider hiring a commercial
mortgage broker. Be careful - in many areas there is little or no
protection under the law for commercial transactions. While a small
upfront fee for out of pocket expenses is reasonable, shy away from
any that want large upfront payments. If they can do the deal they
will be paid very well at settlement. If they can't do the deal they
shouldn't be taking your business at all.
Once you identify a list of potential lenders or hire a broker,
get prepared. Do not think that the business loan process is merely
a matter or forms and paperwork. While there is more paperwork than
you'd ever want to see, it is more of an inquisition.
Step four:
4. Be an expert salesperson for your project. Obviously, we think
that your should use FundablePlans.com to build a written proposal.
Whatever method you use, know your numbers and be able to defend
them. Understand your market and be able to speak competently about
it. Know your competition. Most importantly, (from step one) know
your strengths and weaknesses as a borrower and be able to maximize
the strengths and minimize the weaknesses.
If you are successful with
steps one through four, you will expect to "hit a home run".
You may, but most likely you won't.
5. Don't give up. Where one
lender might have too many loans of your type in her portfolio,
the next may need exactly your loan to meet his goals (loan officers
are paid to lend). This is not to say that you should "beat a dead horse", but if you have a
viable project, a good presentation and good "C's", you
will be able to get financing.
Good luck with your project, if you have questions about funding
feel free to use the e-mail link below.
About The Author
Dave Miller is a business consultant and the creator of FundablePlans.com,
an online business plan builder at http://www.fundableplans.com.
Contact Dave by email at dave@fundableplans.xom
Related Articles
Are You Ready To Be Self-Employed?
Telecommuting As An Independent Contractor
How To Choose a Home Business Opportunity
MLM: The Home Business Choice For Many Women!
Affiliate Marketing: A Great Home Business Idea for Women!
The Benefits of Buying A Franchise
The Downside Of Buying A Franchise
Managing Your Home Based Online Business
Conflict: 5 Ways to Manage Yourself...Since You Can't Change Others!
Women: Are You Selling Yourself Short? Pricing for a Healthy Business
Differentiate and Grow Rich: The Importance of a Strong USP
Collect Your Money - On Time!
How to Get a Business Loan in Five Steps
Resources For Women Entrepreneurs
| 
