We all know money doesn’t grow on trees. This reality becomes especially clear when you’re an entrepreneur. Most startups need a little push to get them on their feet. That’s where small business loans come in. How do you get one? We’re here to help you through the process with a few tips. Read on and cross your fingers—you may receive a small business loan for your startup!
Small Business Loan Application Process
Fortunately for you, small business loans usually have less restrictive requirements than other types of loans. It’s crucial to find out if your business qualifies for a small business loan in the first place (you can do so here). But there is still hard work ahead and you will need extensive documentation. While every lender is different, the most important part of the process is the loan application. According to the Small Business Administration (SBA), you will need the following:
This is a simple statement of who you are, your business background, the nature of your business, the amount of the loan you are requesting, terms of repayment, how the finds will be used and how you will repay the lender.
- Type of business
- Product or service
- Brief history
- Annual sales
- Number of employees
- Proposed future operation
- Date of information
Provide résumés of all key players in the business.
Loan Request and Loan Repayment
A loan request is a description of how the loan will be used including purpose, amount and type of loan. A loan repayment states how the loan will be repaid and how long it will take to repay it. Cash-flow schedules and budgets should be included.
A list of real property or assets that will be held as collateral.
Personal Financial Statements
Business Financial Statements
Include a pro-forma balance sheet to show future profitability.
Show future projections for at least a year or until positive cash flow can be shown. Include reasons for your estimates and how the numbers compare to the industry standards.
Tips to Remember
- Know your business inside and out! Many tricky questions will be asked. Impress the lenders and show them your business will succeed.
- Be confident! If you’re not confident in your business, why should they be?
- Practice, practice, practice! Make sure your message is polished and flub-free. Review Your Elevator Pitch: 7 Must-Have’s.
If funding has discouraged you from growing your startup, small business loans can help! All you need is some patience (hundreds of filled-out forms worth) and hard work. With the funding you need, you’re one step closer to your startup goals!