If you want to start your own business for the first time, you will almost certainly need a loan from a bank. Here are some suggestions for how to get one.
You should know that getting a bank loan will be hard because you don't have a history of running a business. That doesn't mean you shouldn't try, but you shouldn't think it will be easy.
Not at all. Any bank will tell you that a small business loan has risks and that the costs of handling these smaller accounts are the main reason they don't want to lend money to someone who wants to start their own business.
Your first business bank loan is possible, though. Here are some ways to make it more likely that you will get that small business bank loan.
The first thing to remember is to think positively and act like you're in a strong position when you walk into that bank. Remember that you are a paying customer, not a beggar. You buy loans from banks. Most of the time, those banks want and need your loan business, and it's the job of the loan officers to get it.
It's a good idea to start with a bank that knows you as a person and with whom you do business often. However, it's also important to look for a bank that has written loans for others in your industry and stays up to date on your industry. Look for banks that help small businesses get loans.
There are also banks that focus on government programmes, in which the government helps pay for or backs loans. Information about the second one would be easy to find at your local Small Business Administration Small Business Development Center (SBA.)
Keep in mind, though, that the bank will ask for some pretty big collateral for your start-up business, no matter how committed it is to small business loans.
Be ready to show that bank loan officer why giving you and your new business money is not a risky move.
If you can, fill out your loan application before you go. Bring copies of your business plan and a cover letter explaining why you need the money and how your business is doing well and will do even better with a bank loan.
If you are ready to ask for that bank loan, you shouldn't be surprised by any question. Even though the information should already be in your business plan, be ready to talk about how much money your business will need and for how long, as well as what the bank loan money will be used for.
You'll need to talk about whether you're going to buy new equipment, supplies, and assets, pay off some old bills, or use the money for operating costs. You'll also have to show that you have a well-thought-out, doable plan for paying back the loan, along with a payment schedule.
People often forget to mention two important things about your face-to-face bank loan interview. The first is that when you meet the loan officer, you should look your best. Your clothes should be what you would wear to meet a client. The other is that all of your papers should be neat, clear, and easy to read.
