When you are a small business owner, your dreams may exceed your wallet.
Whether you want to expand into another shop, hire someone new, create a new product or enhance what you have already, you may need some money. And even if you are making money, you may need more than you’ve got.
Maybe you are ready to start a small business, and you need some cash flow to do so. A small business personal loan could be your answer.
Do Your Research
But sometimes finding the right loan can be a little tricky. You want the best one to meet your needs and one with the lowest rates, of course.
As the following article, “6 Tips for getting your personal loan approved” looks at, go along with loans on the business side as well.
Take a look at these ideas and you should be on your way to making your business dreams turn to reality:
- Create a well-developed business plan – Make sure that what you want the loan for is clear as well as why you want it – what will it do for your business? Show your lender-to-be how this loan will enhance your business and make money in the long run. If you are just starting your business, make sure your business plan has some numbers and stats included to show how successful it can be. Include your personal information in your business plan, such as education, past work experience, and any other pertinent business (and character) information. It may be easier to get a loan for your established business than one you are just starting.
- Have your other documents at the ready – Besides your business plan, you’ll want to have things like financial statements, bank statements and tax returns ready to share. This will (hopefully) show that you are financially responsible and a low risk for the loan.
- Start in the right places – Start with your own bank. Though banking institutions are not as personal as they once were, it’s a good place to start. You already have a connection and they are aware of your financial situation (hopefully that is a good thing). If that doesn’t work for you, talk to some other banks, maybe starting with smaller ones rather than the larger big names. Small banks are usual more apt to make small loans.
- Know your numbers – If you asking for a small loan for your business, keep it in the small loan realm. According to U.S. Small Business Administration, “in the banking industry the median small business loan is about $130,000 – $140,000 with highest around $250,000. SBA small business loans range from about $5,000 (microloans) to $5 million (largest guaranteed) with the average loan around $371,000.”
- Look elsewhere for help – If the banks don’t come through at first, take a look at some small business associations such as SBA District/Branch Offices and Women’s Business Centers.
- Be patient – If you can make it to the two year mark with your business, banks are much more likely to offer a loan. A successful two years shows stability and less risk. This is a good idea especially if your personal credit is on the lower side.
Getting a loan is an important step in your small business’s life. Think it through beforehand and go in prepared and knowledgeable.
Best of luck, and feel free to share your story in the comments below.
About the Author: Heather Legg is an independent writer who covers topics related to small business, social media and working from home.