Important Ideas And Great Options To Get Money For Your Business

The first step to trying to get money for business is to have a sound business plan. Your business plan is your calling card to the bank or financial institution that not only explains to them why you need the loan, but what you plan on using it for and how you will expect to repay.

UNDERSTAND A BANKER’S MENTALITY

You have to consider that if you are going to a bank for a loan, in effect, you are trying to sell your plan to the bank. As in all good sales calls, you have to understand your customer’s needs in order to be successful Understanding the bank means knowing that they need to loan money at profitable interest rates in order to make money. Yet, they need to be conservative and try to avoid risk when they lend. With small businesses that is a balancing act, because they know that there is a high rate of failure for small businesses.

WHAT HELPS A BANKER APPROVE A LOAN ?

The ideal situation for a bank would be to lend money to an existing business which has been in business over a year, and which shows profitable cash flow that can easily repay the loan. Yet, in such a case, the business probably won’t need a loan.

More likely loan cases, are a new business owner who has a successful track record of owning and running a similar business. Someone who ran a hardware tool supply business and now is opening up a new one. The next best loan applicant for a bank would be the former successful business owner, who is now interested in running a complementary business, or worked for years in a business and now wants to open up on his own.

In all those cases, the banker is most likely to approve the loan or offer you a small business line of credit when a small business owner has some financial reserves and personal collateral sufficient to solve the unexpected problems and fluctuations that affect all businesses.

WHAT FINANCIAL REPORTING DO YOU NEED ?

In all cases you will need a full accounting of how you will be using the money and how you expect your sales and cash flow will allow for a reasonable repayment of the loan. In such cases, take the perspective of the banker and imagine you are the one lending the money. Would your proposal make sense in such a case? Do you think that the business will be able to generate the amount of sales and profits necessary to repay the loan ? Is the money being used wisely?

THINGS TO KNOW BEFORE YOU APPLY FOR A SMALL BUSINESS LOAN

Invest your own money. Investing some of your own money in your small business is another way to improve your chances of getting a loan. Lenders typically like to see that owners have at least a 25 percent equity stake in the businesses they finance.

Check out your credit report. Lenders use your personal credit history to help them decide whether you’re a good risk for a loan, so it pays to know what they’ll find. If your report shows a mistake, contact the credit reporting agency and demand a correction. If your credit report shows legitimate late payments or bankruptcies, you should include a letter with your application explaining the circumstances and how they’ve changed.

Ask your local banks. Smaller community banks might be more inclined to finance businesses in their areas, and their loan officers are more likely to give you individual attention.

Real estate loans – if you want to purchase offices or warehouse that your business will be using, there are many reasonable and easy to apply options for real estate financing.

SIMPLE and QUICK ALTERNATIVES TO BANKS

There are some financial institutions that can give you a quick turnaround on getting a cash advance for your business. If you have an existing business, and use credit card processing, you can get cash within 48 hours. If you are in need of leasing new equipment for your business or professional office you can find an easy way to get leasing financing [http://www.successful-small-business.com/equipment_leasing_broker.html].