How do I successfully get a loan?
Getting a Loan
Initially, the lender will ask four questions:
- How much is the borrower requesting?
- Purpose of the loan?
- Method of repayment?
- How will the loan be collateralized?
When you apply for a loan, provide projected financial statements along with a clear business plan that supplies the name of the firm, location, production facilities, legal structure and business goals. Refer to Section 1 for details.
A clear description of your experience and management capabilities, as well as the expertise of other key personnel, will also be needed.
Selecting and Developing a Relationship with a Bank
When business owners have trouble with banks the major problem is generally related to communication. It’s important that bankers be informed about the business and it’s equally important that business owners be informed about a bank’s policies and procedures.
Open communication with the bank cannot be overemphasized. A well-informed banker may anticipate needs and be able to react quickly to a request. In a problem loan situation the banker may be more likely to work with the borrower than in a situation where communication has been absent.
Business owners and bankers should meet to discuss what is needed and expected by each party.
Laying “Free Money” Rumors to Rest
Be aware of advertisements or programs from so-called experts that offer “insider information” on financing a business with claims the state government or other public organizations have funds in the form of grants or extremely low- rate loans are available to the following groups:
- Individuals who want to open a business
- Companies in severe financial trouble
- Minority, women, or foreign-born entrepreneurs
The “insider information” is usually no more than common business guidelines and a list of government agencies that can be found in a library, telephone book, or on the Internet.
Once a person begins calling these numbers to request money they quickly find out that the programs often have been misrepresented.
The simple truth is that business owners usually must meet stringent criteria to secure private or public financing. Most qualifications for capital revolve around having a sound business plan, healthy financial statements, personal investment, business experience and substantial collateral.
