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JWU Online > Blog > 8 Tips for Getting a Small Business Loan
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8 Tips for Getting a Small Business Loan

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8 Tips for Getting a Small Business Loan

May 13th, 2016
by Patricia Steiner EdD
business loan form
Image Attribution: 
Copyright: murat sarica
business loan form

At some point in the life of their business, most entrepreneurs will need to apply for a business loan in order to grow. In tough times, that can be a difficult challenge. However, the better prepared you are, the better your chances of success. Here are a few tips:
 

1. Determine your need

Why do you need the money? Be clear to both yourself and prospective lenders what business objective you plan to achieve with a loan.
 

2. List the costs

Once you have specified why you need the money, research to determine all the costs of supplies, items, services, etc., that you will need in order to achieve your goal. Cast a broad net. Factor in fees, taxes, and any and all associated costs. Once you have your figure, add more for unforeseen expenses and contingencies.
 

3. Determine how you will repay the loan

Review your cash flow and business financial information to calculate how long it will take to repay your loan. Your banker wants to know that you are a good risk, so be prepared to show that you are.
 

4. Determine what type of loan you need

Two basic types of loans are secured loans and unsecured loans. A secured loan requires putting up collateral (a bank account, home, etc.). Unsecured loans require no collateral but are much more difficult to obtain. If it is an unsecured loan you are seeking, you will need a high credit rating and will need to provide much more personal and business financial information, including a business plan.

 

5. Shop around

If you are looking for a secured loan, talk to the loan officer at your bank and ask for information about their loan programs and the borrowing terms, rates, limits, and variables of each program. Before you make a decision, shop around. Research information from other local banks and Internet lenders. Take into consideration the variables, as well as rates of each potential loan, and choose the loan program and bank that best fits your needs.
 

6. Be prepared

Show your bank you are a low-risk proposition. At a minimum, you should be prepared to present a complete loan application, have strong business and personal credit, address how the money will be used, and be able to prove your ability to repay the loan. Depending upon the loan you are seeking, you should prepare a typed cover letter and documentation listing your business objective, how much money the project requires, how much money you or others are investing in the project, the loan amount needed, and how the money will be spent. Include copies of cash flow and financial statement projections for at least three years, any pertinent graphs or brochures that help to back up your request, and a business plan. Your business plan should include information about your experience and expertise. No business objective is without risk, so be sure to address risks as well. Outline any risks you foresee and how you plan to handle and overcome them.
 

7. Make your case

Before you meet to present your case, review your information, practice what you will say, and be prepared to answer questions. Expect to spend about 30 minutes presenting your case to a bank loan officer. Dress professionally, treat bank officials with respect, and convey your case honestly and with confidence, using accurate figures to support your claims.
 

8. Put yourself in your banker’s shoes

Three of the first questions in your banker’s mind are: Why do you want the money? How will you spend the money? Are you a good risk? Every step you take should prepare you to answer those questions honestly and with conviction.
 
If you do not succeed on your first attempt, do not give up. Learn from your first attempt and try again. You may also want to ask other business professionals to provide a referral for you to their loan officers.
 
Want to learn more about earning your BSBA – Entrepreneurship degree or BS – Food & Beverage Entrepreneurship degree online with JWU College of Online Education?  For more information, complete the “Request Info” form on this page or call 855-JWU-1881.

Tags: 
Entrepreneurship
Small Business
finance
Blog Categories: 
Career Advice
Entrepreneurship
General
May 13th, 2016
by Patricia Steiner EdD
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Patricia Steiner EdD's picture
AuthorPatricia Steiner EdD
Patt Steiner, EdD, has more than 20 years of business experience with specializations in leadership, strategic planning, organization and process improvement, and employee advocacy.Tackling implementation of business and process improvements to improve an organization’s productivity has been Patt’s focus for many years. She started her career as a software engineer at Lotus Development Corporation, and from there went on to hold senior positions at Digital Equipment Corporation, Motorola, and others. She is now principal of her own consulting firm, VentureSphere, whose clients include Fidelity Investments, The State of Hawaii, Bank of America, and Brigham and Women’s Hospital, among others. Patt is an accredited Executive Associate with the Institute for Independent Business and a Certified Business Mentor. She completed her doctoral work in Leadership at Northeastern University, In addition to official certification as an assessor for both ISO 9000 and the Software Engineering Institute CMM program, she holds a certificate in Re-engineering Mastery from the Hammer Institute. In addition, she has been a guest speaker for many organizations, including the National Aeronautics and Space Administration (NASA), The Small Business Administration, The Honolulu Chamber of Commerce, Boston University, The Society for Software Quality, Cornell University, and Mass Bay Community College. Among other accomplishments, Patt holds a degree in Music Performance, and has performed with the Boston Pops, the Florida Symphony, the Oakland (CA) Symphony, and the Chicago Symphony Orchestra.
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