Obtaining a Business Loan

by Catherine Rein
(last updated April 27, 2012)

Starting a business can be one of the most gratifying experiences, but it often also requires a lot of money. Obtaining a business loan will help you get your business on its way. Business loans can be found through banks, credit unions and through some private sources such as individuals. Almost all lenders will require significant documentation on your personal background, credit history, and a detailed business plan as part of the business loan application process.

The following areas should be reviewed before submitting your business loan application:

  • Personal Background. Banks use your personal background to determine your credit worthiness and personal ability to make a business successful. You will be asked to provide information on previous addresses, income tax returns, educational background, and criminal record.
  • Credit History. Your credit history or credit score is similar to the one used for obtaining a mortgage or car loan. You should review your credit report from all three major consumer credit rating agencies before submitting your loan application to the lender. Clear up any inaccuracies or blemishes on your credit report to increase your chances of getting a loan approved. If you are already in business, you should also submit a credit report for your business. Similar to your personal credit history, be sure to review your business' credit report before beginning the application. Most lenders also require a signed personal financial statement. These may be either separate or part of your business plan.
  • Business Plan. The business plan serves many purposes as part of the business loan application. Most business plans include financial statements and historical financial results if it is an on-going business. The business plan will help you prepare a vision for your company, its goals and opportunities, its strengths and weaknesses, and it will help you understand the financial needs of starting a business.

If the business plan seems a little intimidating, there are business plan writers available to help you. If you decide to hire a writer, be sure to do your own homework on the financials and marketing aspects of the business. Know your target customers and how you will reach them. You should research every aspect of the start up or expansion costs and how your business will get a return on its investment. The business plan writer will help you get everything pulled together, but you need to be the expert on your business. Do not depend on the business plan writer to provide business consulting help. Most of the writers out there will not be experts in the industry you are trying to reach with your new business.

There are many types of business loans. The resources below give more information on SBA loans, micro loans, and standard business loans. These loans are classified by the size of the loan, the terms of the loan, and who can qualify for the loan.

Author Bio

Catherine Rein

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