Let’s face it, every entrepreneur needs venture capital to start his or her own small business. Without capital, there’s simply no way to convert your vision into a reality. Even though banks are not lending as much as they used to, business loans may be an option for some business owners and if you choose to pursue a business loan rather than a private investor we would like to provide you with� the information you need!
Create a Business Plan
The first step in applying for a small business loan is to create a structured business plan. This is your professional road map � so to speak � that outlines everything from your legal structure (S-Corp, C-Corp, LLC, etc.) and employees to products and projected revenue. Creating a business plan shows banks and financial institutes how you plan to run your business, which in turn instill greater confidence with loans.
If you need help creating a business plan, spend some time browsing around online. There are several free-to-use resources intended for entrepreneurs whom wish to create a business plan such as yourself, some of which are created and published by the federal government. These resources lay out exactly what you should include (and what not to include) in your business plan.
Hire an Accountant
Banks and financial institutions want to know that businesses will pay back the money they are loaned. Hiring an accountant to help you create projected financial figures shows lenders that you will be capable of paying the loan back. There’s always a chance that a business may fail, but creating projected sales estimates based on current market data and figures shows lenders that you’re serious about running a successful and profitable business.
Watch The Interest Rates
Just because a bank or financial institution offers you a small business loan doesn’t mean you should always accept it. Pay close attention to the interest rate along with the terms and conditions. You obviously want to find a loan with the lowest possible interest rate, as this lower your payments while putting more money into your pockets. With that said, some financial institutions may have fluctuating interest rates, creating confusion among entrepreneurs. Carefully read the terms and conditions of the loan to ensure its an acceptable interest rate that’s not going to place a burden on your business later down the road.
One of the biggest mistakes entrepreneurs make is accepting the first loan offered. Nine out of ten times, you can get lower interest rates and better all-around deals by shopping around. Don’t be afraid to check with multiple banks and financial institutes to see what kind of loan rates they offer. Actively pursuing multiple loans will only benefit your business in the long run.
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