Easy Tips To Securing Your First Loan
- Date: 2007-02-12 - Word Count: 395
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As a small business owner, it can be somewhat nerve racking to go into the bank for the first time looking for a loan. You walk in and have to make your case for why the bank should give you money. Even worse, the bank will often ask you to sign your firstborn just to secure the loan. Well, banks act skeptical for a reason. They are not playing with their own money and there is always someone watching to make sure they are being responsible with commercial lending
Bankers love when a small business owner is organized. This usually means by coming to your first meeting prepared and with a plan. This should make sense, it shows that you have thought through the process and have actually done some thinking about how borrowing this money is going to improve your business. So, you should show how purchasing a new facility will save you money in other ways. If you are applying for a line of credit, show how buying in bulk and getting a discount will effect your business. Show them how buying a piece of equipment will result in more revenue for your company. Prove this to them if you can. This is a great way of showing your banker that you have thought about how you will pay back the loan. In other words, you do not have some sort of 'build it and they will come' mentality.
The fact is, most people don't do these things. They walk in and try to tell the bank that based on a good history with their personal checking account, that they should be approved for a loan based on their word that things will go well. This makes bankers a little uncomfortable. Now, if your company financial statements show that your company can support a prosposed loan payment, then you are in the clear. But, if that's not the case, then be prepared to make your case to your banker. That will be your best bet in the long run!
Dave Roth runs http://www.small-business-finance-tips.com which is a resource site for small business owners to learn about business finance options. The site includes information on startup business loans, commercial mortgages, and business lines of credit . Dave worked as a small business loan officer for many years and now owns and runs several retail locations in Illinois.
Bankers love when a small business owner is organized. This usually means by coming to your first meeting prepared and with a plan. This should make sense, it shows that you have thought through the process and have actually done some thinking about how borrowing this money is going to improve your business. So, you should show how purchasing a new facility will save you money in other ways. If you are applying for a line of credit, show how buying in bulk and getting a discount will effect your business. Show them how buying a piece of equipment will result in more revenue for your company. Prove this to them if you can. This is a great way of showing your banker that you have thought about how you will pay back the loan. In other words, you do not have some sort of 'build it and they will come' mentality.
The fact is, most people don't do these things. They walk in and try to tell the bank that based on a good history with their personal checking account, that they should be approved for a loan based on their word that things will go well. This makes bankers a little uncomfortable. Now, if your company financial statements show that your company can support a prosposed loan payment, then you are in the clear. But, if that's not the case, then be prepared to make your case to your banker. That will be your best bet in the long run!
Dave Roth runs http://www.small-business-finance-tips.com which is a resource site for small business owners to learn about business finance options. The site includes information on startup business loans, commercial mortgages, and business lines of credit . Dave worked as a small business loan officer for many years and now owns and runs several retail locations in Illinois.
Related Tags: business loan, commercial mortgage, small business loan, small business finance
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