When starting or growing a business, you may need to apply for a business loan or a line of credit. The lender will request documents and would like to learn more about you, your business, and your goals. To make the lender trust your business, you should be well prepared. Below you can read 5 ways to get ready.
- Have a Solid Business Plan
Explain your business and its goals clearly and in details. Get ready to discuss your products or services, the industry you’re in, and what you’re doing to achieve long-term success. Be ready to explain why you’re taking the loan and how you’re going to spend the funds.
Be prepared to provide documents on your ownership structure, whether it’s an LLC, Sub S, sole proprietorship, or something else. Carefully analyze the market and the competitors in your field.
- Prepare Your Financial Documents
You’ll be asked to provide your personal and financial statements as well. Prepare a balance sheet that summarizes assets, liabilities, and shareholder’s equity. Your financial results over a period of time (cash or accrual) should also be included in the profit and loss statement. Don’t forget about projections for the future revenue and expenses of your business so to demonstrate long-term stability.
- Don’t Forget About Your Collateral
Make sure to show you have assets that can serve as collateral. Based on your business and personal circumstances, collateral can include:
- Accounts receivable
- Cash and deposits
- Business equipment
- Inventory
- Real estate holdings
- Your Creditworthiness Will Be Based on Several Factors
Your creditworthiness will be determined due to several factors such as:
- Capacity
- Capital
- Collateral
- Conditions
- Character
- Communication
- Research All Your Options
Research all the available options and see what they offer and what advantage you can get from them. This way, you can make the right decision that will enable you to grow your business and reach success.
Consider applying to a reputable business loan provider like First American Merchant (firstamericanmerchant.com). FAM offers exceptional business funding opportunities to merchants of any type and size.