Steps to Getting a Business Loan
As an entrepreneur, you may be faced with the challenge of acquiring a business loan as you consider launching a new business or expanding an existing one. To be successful, you must be strategic, prepared and organized. Your greatest chance for success lies in being able to clearly understand and communicate how much money you will need, why you need it, what you'll do with it and know when you need it. Here's my 6-step process to getting that business loan you need:
1. Prepare personally - Get a free credit report from one of the credit sites. Make sure there are no mistakes and if there are listings of non-payment see what can be done to mitigate any issues. Download a personal financial statement and fill it out. Any financing source will require this so it's best to be prepared. You will also need to copy three years of your personal tax returns for your loan package.
2. Prepare your Business Plan - A business plan will identify all uses for capital whether it is for a startup or an existing business. In fact, until you have finished your business plan you probably won't even know how much money you really need. A good business plan will also have detailed financial information including several years of projected financials as well as several years of past activity for an existing business. You will also need to include details as to the uses of funds and an analysis of the market opportunities that make repayment of loans likely.
3. Identify potential lending sources - All lenders are not created equal. While some banks say they want to work with small businesses, often that is just PR. Local and regional banks are best. Make a list of at least 8.
4. Plan your presentation - Put together a professional looking presentation to give to the loan officer. Have ready everything the loan officer will need including tax returns, personal financial statements, and your business plan. Have everything professionally bound and include charts, spreadsheets, leases or anything that will help sell your opportunity.
5. Practice your pitch - A commercial loan officer is more likely to go to bat for you with the loan committee if he believes in you and your opportunity. Practice trying to sell your idea to some business professionals that you know that have gotten a business loan.
6. Make an appointment - Loan officers are busy so be mindful of their time. When you make the appointment briefly explain what you'll be talking about and how much time you will need. Again, all lenders are not created equal so visit several.
Need a Loan to Expand or Start your Business? We Can Help!
Despite what you hear in the media about Shark Tank, Angel Investors or Crowdfunding, the most common way to fund a startup or expand an existing business is still good old fashioned debt. And, you don't have to take on a bunch of partners to get the money either. While it can be difficult to get a small business loan, it's not impossible. Banks are flush with cash but new, tighter lending guidelines mean you have to have a solid loan proposal.
While we cannot guarantee financing, the Louisville SBDC team of experts will work closely with you to prepare all the necessary documents and projections you'll need to make a solid presentation with lenders. With a comprehensive loan proposal in hand, your adviser can make recommendations as to likely financing sources and make initial introductions.
The goal at the Louisville Small Business Development Center is to not only help you obtain a loan, but to simplify the process. While we do not make business loans, we know that proper preparation increases success. And to help you succeed, we have developed the expertise, tools and connections to financing sources that can save you time and offer you greater access to financing possibilities.
Our mission is to help startups and existing businesses get capital so they can grow and hire more people. Through our extensive experience, we've developed a process that can help you get the financing you need. While we can't guarantee success, we've helped enough people that we know what lenders are looking for. Let us help you navigate the funding maze.
Helping to make your small business dreams a reality is our ultimate purpose. And, we are very good at what we do.
If you need a business loan to start or grow your business, contact me. I'd like to help. davidoetken@uky.edu