Applying For A Small Business Loan

A friend of mine and I used to go dancing. We took flamenco classes, while her daughter carved up the room in ballet shoes. The problem for all of us was that finding clothes to wear meant an hour’s drive down the mountain, to an immense plaza and the nearest Bloch.

Seeing a need for it, my friend got a small business loan and opened a dancewear store. It was a gamble, calculated, but a gamble nonetheless. Luckily, with a young population, there are plenty of school-age dancers in desperate need for a tutu and some ballet flats. Ten years on, and the business is a success. She was a mum who wanted to work for herself and in a field she was interested in. It’s an inspirational story for you and I, so often looking for the perfect place to invest our energies. So, if you’re chasing the dream for a small business, what are some essentials when applying for a small business loan?

 

Maintain Income Sources

It is tempting to throw your resignation on the desk of your unappealing boss, take your favourite mug from the staff kitchen and leave forever but if running a small business has taught me anything, it’s that you never want to burn those kind of bridges. Steady does it, and maintaining a day job in the first couple of years of setting up a business is important, especially when it comes to the approval of your small business loan. Lenders want to see you can repay, not solely from the profits of your small business but from other income streams.

Place Yourself Properly

Before marching into the bank, ensure that you’ve placed yourself properly to start a small business. If this means adding a couple of years to the game plan, then so be it. You’re far likelier to get approved should you have assets the loan can be secured against, and my conservative soul would baulk before ever using a family home as such. Take a couple of years, certainly get out of debt, and look at what assets you can garner to ensure security for a loan.

Records

You’ll need a slew of records to convince a lender to finance a small business. To be honest, you’re going to want to have them anyway. An in-depth plan of your first 5 years should be something you’ve already mapped in great detail. Bank on also providing personal financial details, tax records and a thorough budget.

Dress Nicely

If 90% of communication is non-verbal, you want to do everything in your power to communicate the right message. There is a reason that loans are discussed in person; lenders take character, both references and what they see before them, very seriously. This is your dream, so communicate it to them. Present a professional demeanour, and be prepared to articulate clearly about your previous education, employment and industry experience.

Credit Check

Don’t go into battle unarmed. You don’t want any surprises cropping up from your credit report, so check and recheck. It takes very little energy to check a credit report, and you’ll be completely across the situation- good or bad- once you acquire it.