You've found a great business chance and want to take advantage of it as soon as possible before it goes away. But you don't have enough money to get that business up and running. What can you do?
You could borrow money from friends and family, or you could go to a financial institution like a bank and ask for a loan for your business. The second option requires some planning, since you'll have to show the loan officer that you have a good business idea and the experience and skills to make it work.
Most loan officers will want to know more about your business idea and how you plan to use the loan money to make it happen. It's important that you back up your plans with facts. All of this will be in your business plan.
If you are starting a new business, read this.
With a business plan, you take an idea for a business and give it shape and direction. It starts with an executive summary, which must include the amount you need to borrow, the type of loan you want, and a short description of the business opportunity you want to pursue.
In addition to the Executive summary, you'll need to show some documents to back up your request for a business loan. This first and foremost includes your plans for money. The loan officer needs to believe that the business idea has a good chance of making money, which will allow you to pay back the bank. Your income statement, cash flow projections, and balance sheet are all important documents.
You will also need to prove your skills and credibility to show that you know how to run the business opportunity well. Include your resume or bio, references, and any information you have about your business partners.
For filing, you should also give your driver's licence number and social insurance number, as well as a list of your bank accounts, a statement of your personal net worth (with a list of your assets and debts), and credit references. This will help the bank look at your credit history and figure out how much of a "risk" it is to lend you money.
If you want to grow a business you already have,
If the company already exists and you are getting a loan to grow it, you will also have to give a copy of the company's bank accounts and credit references, a complete set of financial statements from the last three years, current year-to-date financial statements, and accounts payables and receivables.
You will also need to give the loan officer a history of your business, information about the products and services you already offer, and statistics that show there is a market for growth. You might have to show statistics or research about the industry to show that there is a business opportunity and that your current resources can't handle the growth that could happen. You may also have to show a plan for how you will spend the money and how much more money you expect to make.
