Small Business Loan Finance
Small business loan finance is almost a prerequisite when starting a new business. Generally the main problems when starting out are having enough cash flow to survive your first 12 months in business.
Why Get a Small Business Loan ?
Many a profitable business has gone bust because they don't have enough cash to pay their creditors so having a positive cash flow is key for long term success.
Your initial loan finance is therefore likely to be for cash flow finance. This funding will enable you to develop your products or services, recruit staff, secure premises then launch and market your business. And most of this activity will be before you make your first sales so having positive cash flow is essential in the early stages of your business development.
How to Get Business Loans
To ensure you have the best chance of getting your unsecured business loan finance you will need to prepare in advance of meeting with your bank manager. Even before you think of calling your bank manager to discuss the situation you should have developed your business plan.
The section they will place most emphasis and attention on is your financial plan. They want to assess the risk of lending to you and be sure that any monies loaned will be repaid as agreed. When developing your financial plan remember to include any loan repayments.
Once you have developed your business plan it's a good idea to get someone to check it over for you. If you know someone who has accounting knowledge then so much the better.
Getting Bank Loans
Before telephoning your bank and arranging your first appointment, develop an "elevator" pitch as you'll likely be asked about your business idea and why it will be successful. Write down 2 or 3 paragraphs about your business idea, why people will buy your products or services from you, what your turnover and profits are going to be over the coming years, and the exact amount you need to finance your initial cashflow.
Then you are ready to phone your bank. If you already know someone at the bank then talk to directly to them. If this is your first contact ask to speak to the business finance department. You will get through to the right person. State that you are starting a new business, that you already have your business plan developed and you want to come in and talk to someone about a business loan.
The fact that you already have your business plan ready will likely impress them as not many new entrepreneurs even get to this stage. Arrange the meeting and prepare for it as discussed above. Before you show your business plan ask the person you are meeting what they are looking for from you. They will almost certainly want to see something specific to that bank. This maybe a specific format, or some paperwork they require (eg: business incorporation).
By asking them what they require from you they will see that you are serious about your business. Then when you meet them you will have exactly what they are looking for to hand.
Take along 4 copies of your plan. This is so that yourself and the bank have a copy to discuss and if other members of the bank are at the meeting you can provide additional copies as well. If you have everything on a PC then take your laptop so you can change the finances you have forecast at the meeting if required.
If you get turned down for your loan then you should ask questions as to why they have made this decision. Don’t just leave the meeting dispondent and not knowing why you haven’t got your loan. It may be something simple you can fix or change and prepare for an additional meeting.
Follow the above and we are sure you will have success getting your small business loan finance.