How to Get a Business Loan - A Deeper Look into the Proper Method

How to get a business loan is one of the many questions that a prospective business owner or entrepreneur must answer in order to move forward on the road to business success. It may often seem like an exercise in patience and perseverance instead of a business transaction but the fact is that every business must go through this exercise if they want to survive, grow and prosper.

There is no one correct answer to the question of how to get a business loan but there is a lot of advice that anyone who has been to the process can offer and many successful business people who have navigated these troubled waters. The best way to find out how to get a business loan is to ask one of them for their advice and guidance. Another source of valuable information on how to get a business loan is the offices of the Small Business Administration.

The Small Business Administration (SBA), an agency of the Executive Branch of the federal government, was established specifically to assist small businesses get access to the funding and expertise they need in order to be successful. You can visit the Small Business Administration website or drop in to one of the many local offices located all over the country for advice, assistance and information on how to get a business loan and how the SBA can help you do that.

Another source of information about how to get a business loan is from the banks, credit unions, and other lending institutions themselves. Every financial institution will have their own criteria for lending to business but almost all of them have great difficulty providing an initial start up loan to businesses, especially small businesses. That's because in their view the risks are too great for a small business to succeed in its early days of operation and the fact is that many small businesses fail in their first two years of business. They will consider start up funding in some situations but their conditions are not very flexible and usually require a personal guarantee to secure that type of business loan.
Tip! (u)Your Investment(/u) Business loan applicants should have a reasonable amount of their own money invested in their business. Lenders want to know that you will be motivated to work hard to make your business a success.

But after a business has been in operation for a period of time the answer to how to get a business loan becomes a very simple one. It involves having good business credit, a solid record of meeting all business expenses and payments, and a good business case for the use of the monies to be borrowed. Banks and other lenders use business reporting agencies to check on the business creditworthiness and ability to pay of all businesses that they lend money to. This will often include a reference to the business's Paydex Score which keeps track of the payment record of businesses and a check on the personal credit records of the business owners themselves. If they are satisfied that the business is in good operating shape they will almost always consider positively a request from an established business.

The very short answer to how to get a business loan is to run a good business and pay all your bills on time.

David Gass is President of Business Credit Services, Inc. His company publishes a weekly e-newsletter on Starting and Growing a Small Business at http://www.smallbusinessconsulting.com. You can sign up for their free newsletter by visiting http://www.smallbusinessconsulting.com.

Business Start-Up Loan - Capital is Your Key to Success

Most Americans have a series of dreams that they hope to achieve in the lifetime. They include owning their own home; raising a family and seeing them head off to college. Those dreams often include having their own small business. The good news is that millions of Americans achieve that goal every year. The bad news is that many more can't make that happen because they don't have their own capital or the credit to be able to get a business start up loan.

You would think that access to capital would be the easiest thing in the world for the greatest capitalist country in the history of the world, and in many ways it is, just not the kind of capital that is easily encouraged to invest in a business start up loan. The major reason that it is difficult to obtain a business start up loan is lack of experience in both operating a business and in utilizing business credit. The other reason is risk.

Banks, credit unions, and other lending institutions like to lend money, that's their business. They lend money out, charge a reasonable rate of interest for the use of this money and then rotate the money out again in the next loan arrangement. But banks are also risk adverse. They don't like taking chances with their money and many of them see a business start up loan as too much of a risk to take.

The reality is that hundreds of businesses open and close their doors permanently every year in America. Some fail because the business idea wasn't as brilliant as originally thought, some fail because of management negligence of inexperience, and some fail because the owners do not have the necessary capital to finance the on-going operations of a business trying to break into a competitive marketplace. The banks are observant of this activity and they are also aware that a great percentage of small businesses do not make it past the first year of operation and by the second year the attrition rate is staggering.
Tip! Poor credit business loans can offer the business owner or owners the opportunity to improve their business, and ultimately, improve their financial situation, economic standing, and ultimately, their credit ratings.

So getting a business start up loan is not easy. But that doesn't mean it is not possible. The best way to get a business start up loan from a bank or credit union is to prepare a solid business plan. This plan should include a survey of existing similar businesses in the marketplace, an identified need for the services or products being provided, and a clear and compelling argument as to how the business can meet that need. The banks want to be convinced that the business can survive before it will even consider providing a business start up loan. Even then the bank may ask for personal guarantees, a co-signer for the loan, or collateral to back up the request for a start up business loan
Tip! The rate of interest on a poor credit business loan varies greatly according to the collateral offered. An unsecured poor credit business loan will have a much higher rate of interest.

David Gass is President of Business Credit Services, Inc. His company publishes a weekly e-newsletter on Starting and Growing a Small Business at http://www.smallbusinessconsulting.com. You can sign up for their free newsletter by visiting http://www.smallbusinessconsulting.com.