Every business small or big faces the need of financial assistance for Start-up, growth, expansion, and modernisation or simply to meet unforeseen losses. There are various sources of financial assistance for small business owners like Loans, grants, merchant advances, angels, friends and family etc. Of all the above mentioned sources loans seem to be the most sought after.
Commercial Loans
Commercial Loans are an integral source of raising funds for all businesses either for expansion or for setting up a new venture. These loans can give shape to your innovative ideas and the support extended by the financing institution might prove beneficial for both the parties.
Planned Approach
However, these financial institutions sanction loans only to the genuine applicants who they trust and feel would prove profitable for them. They have a well devised process of scrutinizing and verifying the applicants. Therefore extra precaution should be taken while applying for such loans as the chances of rejections are high.
Small Business Administration (SBA)
All small business owners should consider the U.S. Small Business Administration (SBA) for seeking financial assistance or business counselling. SBA is a body that works towards the promotion of small businesses and helps them in seeking financial assistance from their approved lenders by providing a guarantee. It has delivered millions of loans, guarantees, guidance and other kinds of services related to small businesses through its programs.
Are you Credit Worthy?
Before applying for a Small business loans we should be aware of our credit record and get a no objection certificate from all the major credit reporting institutions in our area. All financial institutions will counter check the credit record as the first step, in order to process the application.
Proper Documentation
Every financial institution might have a different filing process. So, we should be well informed about all the documentations required for filing the application. All the documents to be filed must be collected. Doubts if any must be cleared at this stage itself from the institutions helpdesk.
Effective Business Plan
Generally, the lending institution requests for the business plan, Budget allocation, details of assets & liabilities, three year’s financial statements of the applicant and the business house, future projections and the term of repayment.
Loan proposal
All the required documents should be accompanied by a loan proposal serving as a cover letter for the application. The proposal should include the objective of the loan and the exact amount required. Personal resumes of all the partners can be attached along with the marketing strategy and future prospects.
Expert advice
It is always advisable to seek the help of a loan officer representing the institution in preparing the documents. Fix up a meeting and consult before applying.Finally submit the complete list of documents to the appropriate person in the institution and ask for a follow up time.