The more work you do in advance of your application, the more likely you are to succeed in securing a loan. Here are three steps to getting a business loan. And they want to feel that if the business goes through a difficult period, you’ve got enough personal reserves or collateral to get through the rough patch. They want to feel confident in you as an owner. What are lenders looking for? As much certainty as possible that they’ll be paid back. Think about every part of your application from the lender’s point of view. As you go through the process, remember to keep your audience in mind.
#The best business plan to get a loan upgrade
A small business loan will help you hire the staff you need, upgrade your equipment, open a new branch, or do any one of the many things that will make you more successful.īy putting in some work before you apply, you’ll increase your chances of being approved. This is beneficial because you will have created a game plan before you were in the heat of battle with a roadmap for how you will address those challenges.Whether you’re just starting out in business or have been running a company for years, there will likely come a time when you’ll need to invest more money than you have in order for it to grow and flourish. Of course that doesn’t mean that there won’t be a crisis, the coronavirus pandemic we’re going through right now is a good example, but it will help you better react because you should be including “what if” scenarios in your plan should things turn upside down. This will help you avoid trying to meet business crisis circumstances and instead make your approach to borrowing more strategic.
If you treat your business plan like a roadmap, once you have all your goals outlined, understand the costs, and have identified all the details of your plan-you can use that information to identify, and plan for, the timing of your loan request. Your Business Plan Will Guide Your Timing Not only will it help you make better borrowing decisions, whether your lender requires it or not the fact that you have spent time thinking about it will resonate with a loan officer trying to make decisions about your loan application compared to someone else who is not quite as prepared to have these conversations. Your loan purpose should drive the loan amount-and you should have that articulated in your business plan. Your business plan will help you better align what you’re looking for with what you really need. There are costs associated with financing that can make borrowing more than what you really need a dangerous idea. Whenever I ask them about how much they want to borrow, if their response is, “How much can I get?”, I cringe. Your plan should clearly identify your current financial position and help you strategically look into the next year, two years, or five years to determine if you’ll be able to use cash flow or if your business will need an infusion of borrowed cash to meet your objectives.Īlthough I’m not a salesman, over the years I’ve spoken with many business owners looking for borrowed capital. Borrowed capital should rather be considered as a useful tool to help you meet the business objectives and goals identified within your business plan.
Watch the Webinar Your Plan Will Identify How Much Money You Really Needĭespite popular media promoting the idea that more capital is the solution to just about every small business challenge, it isn’t. The exercise of building a business plan will help ensure that doesn’t happen to you.īy the end of this webinar you will have an understanding of why lenders want to see a business plan and how you can craft yours to be an asset to your business.
I once spoke with a lender who said, “If I can tell more about a business’ financial health by looking at the financial reports than the business owner, I’m not going to give him or her a loan.” If you are unsure about what these reports are telling you, your accountant or other financial advisor can help you decipher what the numbers are telling you. This information will not only help a potential lender, but it will help you evaluate your business’ ability to generate profits, identify problem areas, and help you determine if you have the necessary cash flow to make timely periodic payments (something a lender will also want to know) on a business loan.Ī business plan also gives you the opportunity to dig into the financial reports, something many business owners don’t spend enough time doing, to learn more about your business’ financial health from the inside out. Your business plan will put financial data a lender will need to evaluate your business’ creditworthiness at your fingertips: Get started Your Business Plan Will Identify Your Path to Success Do you need more money? Sign up for Nav to see what options are available for your business.
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