What is a business loan? If you want to get a business loan, then you will first have to be sure you know what you are getting yourself into. A business loan can be used for many different purposes, but most often you will be seeking cash or equity in a business to help make it what it can become. There are also many other types of loans, which will vary from one business loan to another.
To have a successful business, a business owner has to have an excellent business plan and business strategy. If a business is going to be successful, it needs to be able to stand out in the marketplace. If the business plan is not well developed and it’s not well thought out, a business may not be able to succeed.
Business loans are not as complex as they may seem. To qualify for a business loan, you will need to meet certain requirements and prove that you have the capital to start a business or expand your current one. While it’s nice to have a lot of money, it is unlikely you can get a business loan that is too large.
Access to capital is critical to growing your business, whether you want a larger space or want to expand your operations. Business loans are useful tools to accomplish these goals. And if you’re considering applying for one, it’s best to prepare well before you hit the bank.
Having your data organized will allow you to present a more robust application to the financial institution, and will help you to make an evaluation of your business and even reflect on your business plan to achieve success.
These steps are crucial:
Have a good purpose
Your bank needs to know that the money will be used to add value to your business. You can apply for a loan to expand your business, cover payroll, buy new equipment or increase your cash flow, among others. Make sure you know well the needs of your business and the purpose for which you will be using the requested money.
Go to the correct entity
Approach institutions that have good credentials and that have granted loans to businesses similar to yours, in your same industry and geographic area. Those entities already have much of the information they will need to make a decision on your case.
Request the loan that best suits your business
Make sure payment terms match your business’ cash flow. Be prepared to offer a guarantee that is related to the purpose of the financing. Another good option: ask for guidance on a loan guaranteed by the Small Business Administration (SBA).
Collect the necessary documentation
Make sure that the filing of the payroll, property and tax forms are up to date. As part of the application process, you will need to include:
- Income tax returns for the last two (2) years
- The Financial Statements of the last two (2) years. It must include an Interim Statement for the current year, as well as the Statement of Situation and Income and Expenses
- Accounts receivable and accounts payable reporting
- Projections of income and expenses for the next two (2) years of operations
- Copies of contracts of your most important clients
- Patents and any other proprietary information
Review your business plan
This plays a crucial role and should include:
- Business Description
- Marketing strategies
- competitive analysis
- Development plans
- administrative plan
- key employees
- Financial information
After evaluating these tips and if you are ready to apply for capital for your business, learn about the options that Popular offers and apply online.