Key Issues Associated With Business Loans
Education, improved means of travel and communications and the advent of computers have shrunk global boundaries. The world seems to have become one. A hard working, intelligent person with innovative ideas always wants to give wings to his dreams. One thing he doesnt need to worry about is how to obtain the finances needed to implement his ideas for starting a business. Today, there are many different sources for obtaining business loans.
Benefits of Business Loans:
You no longer need to depend on friends and relatives for small business loans as more and more lenders are realizing the profitability of backing the little guy. Business loans have many benefits to the entrepreneur. They allow the businessman to retain the ownership of his company without the risk of tying up his company equity with shareholders. This gives him the flexibility to move the business in any direction he wants. It makes him the master of his own destiny.
Types of Loans:
There are three types of business loans:
Short-term business loan. This provides capital to start business operations. They are generally for one year or less.
Intermediate term loans. This type of loan helps new businesses pay for equipment and cover large start-up expenses. They are usually available from one to three year terms.
Long-term loans. These loans help to start up business, covering initial costs, equipment, furniture, fixtures and commercial mortgages. Such loans are typically granted for three to seven years before repayment installments become due.
Preliminaries for a Loan Approval:
Before approaching a lender, determine your cash needs and present a comprehensive business plan. Analyze your current or projected business cash flow and make a realistic plan for loan repayment as part of the loan application. Incorporate the following points in your business plan presentation while preparing a loan request.
Purpose of the loan
Realistic estimate of capital required
A management profile
An overview of the market, your projected customer base and competition
Personal and business financial statements
Collateral that can secure the loan
Supporting documents such as articles of incorporation or LLC organizational documents, proof of ownership or sale if you have purchased the business, material contracts, and letters of reference, financial statements or tax returns for the last three to five years, a list of assets and liabilities and credit references.
Post Loan Approval Actions:
Work with the lender to obtain comfortable terms
Work out the loan repayment date and manner of payment, whether in a lump sum or installments
Negotiate a market-value interest rate equal to or better than the rates seen on similar types of loans
Consider the fees associated with the loan
Keep in mind fees or penalties imposed for default of the loan terms
Work out a realistic payback plan in conjunction with your business plan
Obtaining a loan will depend in part on the criteria and expectations of the lender. Read the loan agreement carefully and have your lawyer to review it.
Receive the booklet How to Build Business Credit by David Gass President and Founder of Business Credit Services. It will share with you how more than 10,000 businesses across the nation have achieved over $175 million in combined financing in their business name only, all using his patent-pending system to build corporate credit separate from your personal credit.
You will also learn the first steps required to getting a business loan, lease, and other lines of credit without the use of a personal credit check or guarantee.
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