Turning a Dream to Reality: Applying for Your First Business Loan
While positivity and planning makes for a big portion of turning your dreams into reality, nobody can deny the importance of capital to any #sidehustle.
If you are wealthy and have the funds to put in, a business loan may not be something you’re looking into. However, most people go by limited funds and usually put their entire savings into the business – something that is a big risk, especially if you are going into business for the first time. This is what a business loan is good for.
Whether applying for a personal loan or a business loan, it is a daunting pursuit if you are not ready for it. While banks make a big profit from loans, recent financial crisis has caused them to be more stringent with their guidelines and application procedures. Startups are always considered to be a gamble, so many lenders aren’t keen on making the approval. Don’t let this dissuade you though. As long as you compile everything needed from you and you have a strong plan on how to make the money back, banks would most likely give you what you need.
Step 1 – Business Plan
Business Plan – the less holes in your plans to make your company work, the higher your chances are to get a loan. Write down a business plan that outlines your company’s operational process, markets, competitors, and both current and projected financials.
Step 2 – Research
Find a business counselor or a loaning officer from the bank, so you can understand and find out the best sources of loans and assess just how much your business is qualified to receive.
Step 3 – Documents
Organize all your documents based on what the bank will require. Once at the bank, they will be able to provide you with a list of things that they need to see in order to process your application. To avoid several trips, make sure that you have everything on hand.
Step 4 – Collateral
List down what the bank can get as collateral for loaning you the money for your business. It can be vehicles, equipment, and other items of value which you will be using to operate. Your personal assets can also be counted as collateral. They can assess your current personal finances. In most cases, a guarantor will also be required.
Like I always say, slow progress is better than no progress. Take each step one by one and take your time, you’ll be surprised at how far you can get in a few months if you stay determined to get through each step.
Have you ever applied for a loan? Tell us all about it in the comments below.