Even during challenging times, a small business with a sound strategy can obtain a loan. If you’re looking to start or expand your business, here are strategies that may help you acquire the financing you need.
Have a Solid Business PlanREAD MORE: At Least 2 Dead In Head-On Crash Near Lake Mille Lacs
Be prepared to present a basic business plan to potential lenders outlining, if possible, a past, solid record of profitability, plus a three to five year plan. Include current and projected sales. If you aren’t operating in the black, include a solid marketing initiative outlining how you will rectify your current situation. Use as much detail as possible. Make sure to include your projected budget and cash flow statement.
Pursue a Bank Loan
Many banks have solid reputations as being lenders you can trust, plus typically offer the lowest interest rates available for small business loans. The trick is finding a bank willing to work with you. Many small business owners set their sights on one or two banks and, if turned down, give up. A better strategy is to cast a wide net and research seven to 10 banks you would be comfortable working with. If your business is creditworthy, you may ultimately find a bank willing to work with you, provided you keep pursuing your options.
Think Big, Ask SmallREAD MORE: Parents Demand More Distance Learning Options As COVID Cases Rise Ahead Of School Year
You may have big dreams, but large loan requests are less likely to get approved by banks than small ones, despite your current assets or collateral. Go as bare bones as possible, building small, short-term gains into your business plan.
Look into SBA Loan Programs
The Small Business Administration can facilitate loans with third-party lenders, such as banks and community development organizations and help identify other venture capital sources. SBA small business loan types have a variety of requirements and eligibility factors. Typically, businesses will need to have reasonably invested equity and be able to show a solid need for the loan, as well as have no past history of delinquent debt obligations to the government. Some businesses are automatically ineligible, such as those involved substantially in legal gambling, religious instruction or life insurance companies.
Seek Out Peer-To-Peer Lending
Alternative, online peer-to-peer lenders help fill in the gap between banks and interest-gouging cash advance lenders. If your business doesn’t qualify for a bank loan, peer-to-peer lending may provide a viable, short-term option, provided you are able to commit to a personal guarantee or substantiate business-related collateral. Interest rates vary and can go high, so make sure to ask the right questions before you commit.MORE NEWS: Drought To Have Lasting Impact On Minnesota's Christmas Tree Farms
Corey Whelan is a freelance writer in New York. Her work can be found at Examiner.com.