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How To Apply For A Business Loan

When a business opens its doors for the first time, it uses financing it received from a variety of sources. As a business grows, funding becomes necessary for:

  • Ongoing operations;
  • Launching new products;
  • Expanding the business;
  • Maintaining inventory.

If you are an entrepreneur who is just getting started with your business, then you will need to know how to apply for business loan.

It is important to understand the process of applying for funding because understanding will significantly reduce the amount of time it takes to get approved.

How To Apply For A Business Loan

Have An Updated Business Plan

Any finance company is going to need to see a general outline of what your business does and what your plans are for future growth. When you start your business, you should have created an initial business plan that you follow when you make all important decisions.

That business plan should also be updated at least once per quarter. When it is time to apply for funding, you will submit a copy of your business plan as part of the application process.

Develop A Detailed Reason For Needing Funding

When you apply for financing, the lender is going to need to know why you need the money. You will need to outline, is detailed specifics, why you need the money and what you intend to do with it. Include such details as:

  • How much money you are looking for;
  • The project you will be spending the money on;
  • The expected return on the investment;
  • The specific aspects of the project that you will need the lender to finance.

Your application for funding will be passed to several people and you will not always be there to give a personal presentation to each individual. That is why this report needs to be extremely detailed and specific.

Shop For The Best Lender

The decision for a lender to fund your business is an important one for you and the lender. The lender wants your business just as much as you need the funding.

That is why you should always take the time to shop for a lender that will give you the best deal.

A proactive business owner is constantly networking with financial professionals to give themselves options when it comes time to fund a project.

Spend your time constantly building your network of active financial contacts and then work that network to get the best possible deal.

Get The Deal In Writing

In some ways, getting business financing can be a lot like buying a used car. The lender will give you a lot of details about their offer before you sign the agreement, but then some last-minute fees can slip into the lending agreement before you sign it.

If you don’t take the time to read the finance agreement, then you may wind up taking on fees that you never expected.

Negotiate with each lender and get each financing offer in writing so that you can compare them. If you feel more comfortable having a contract attorney look the offers over, then make that investment and feel confident in the decision that you make.

Funding your business from outside sources will be an ongoing process. In order to get the most out of each financing agreement, you need to follow the proper steps to get financing and then pay close attention to each proposal that you receive.

Maintain a network of active lenders that you can call on when you need funding and you are sure to get the best deal possible.

Images: ”Road sign to business loanShutterstock.com

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Peter Watson is the CEO and founder of Biz Listings Australia - A buying and selling business for sale website. https://www.bizlistings.com.au

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Comments
  • Good post Barney.
    I guess many companies will argue that these are times to focus on the cash rather than what you mentioned above. Many would understand later that workforce impacts that cash.
    A few months ago we decided to spend less time on the road and meetings and instead, invested that time with our existing customers, delivering more value, pursuing a Purple Cow http://bit.ly/d333t8 As a result, the top three metrics that you mentioned were impacted very positively.

  • Thanks Barney for pointing out these four things to measure in doing business. Now, the only challenge I see here is how to apply what you wrote in measuring my business performance as I’m doing it purely online through various social media channels. Is it enough to rely on what people say about your brand online? Still, I think that quality and trust are the two things that matter most.

  • Hi Barney,

    I try to look at the metrics that I prefer to avoid 🙂

    I guess it’s human nature to want to feel comfortable and look at things that flatter us or make things look that bit rosier than they are.

    Someone suggested to look at the metrics/stats that you leave to last and focus on those instead.

    I guess it’s one way to see one’s blind spots and avoid going in circles.

  • Nialldevitt

    Nice one Barney! Coming from sales, it always amazes me how little we attempt to measure in business. I’ve had running battles with marketing departments in particular over this down through the years 🙂

  • Anonymous

    Great post Barney. I recall reading that a happy and motivated staff will resulted in satisfied customers. I concur with Fred’s view that the tendency is to focus on the cash – classic short term over long term.

    I’ve worked in companies where employee satisfaction is measured, and in companies where it has not been. For me the important thing is to take action based on what the measurement tells you.

  • Hi Frank. Thanks for the comment. Agree with you on the taking action on what the measurement says is key – otherwise what’s the point in measuring it in the first place 🙂

  • I hear you. It’s a problem in many different departments – the excuse is often given “we don’t konw how to measure X” – that is just an excuse though. There is always a measure

  • Good man Ivan – at least you attempt to look at the metrics that might not be as shiny as you might like :). You are right though – by having measure, it’s you will see where the gaps are. Thanks for the comment.

  • Hi. Interesting challenge. If you are conducting all of your business development through social media – how are you measuring that success (or otherwise?). Perhaps that is a good place to start. Google analytics can help along with customised measurement tools.

  • Barney,

    Great Post! I spent 15 years as a corporate controller and a BI (Business Intelligence) Expert. You’re right. We used to say, “whatever gets measured, gets managed.” So I measured everything and worked for corporations that made incredible money.

    John

  • Hi John. Thanks for the comment. It does make a big difference working in a place that manages what they measure! It can be very frustrating working in a place that tries to do one without the other. It just doesn’t work.

  • I use common performance measurement like you mentioned above. But I think we shouldn’t try to focus too much on one particular metric. Maximize profit but poor employee satisfaction is not something sustainable. 

  • Thanks for sharing these tips with our readers Peter. It’s surprising how many people wouldn’t realised the best ways to go about applying for a business loan. I look forward to your next post for us.

  • Peter Watson

    Thanks Sian. We get asked a lot of question regarding business loans and its always surprising how unprepared some business owners are. Touching up on some general information can be the difference between a successful applicant and a an unsuccessful applicant.

  • Harry

    Peter – Excellent advice. I would also add that you need to have all documents in order before you apply for the loan. Any lender will ask to see your financials, sometimes dating back 3 years, to ensure the business is on the sound footing.

  • Iram Vielberth

    Are you a business man or woman? Do you need funds to start up your own business? Do you need loan to settle your debt or pay off your bills or start a nice business? Do you need funds to finance your project? We Offers guaranteed loan services of any amount and to any part of the world for (Individuals, Companies, Realtor and Corporate Bodies) at our superb interest rate of 3%. For application and more information send replies to the following E-mail address: barrymoreloans12@hotmail.com

    Thanks,

    Mr. Barry More.




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