Business Loan and Business Plan Applications
As we have discussed throughout
this website, there are a number of factors to consider and take into account as
you look for a business loan. The business loan applications available will
assist you in preparing the necessary documentation and securing the type of
debt capital you need.
Prior to filing a business loan
application, it is imperative that you know your current credit score among all
three major credit bureaus. This will ensure that you will have the appropriate
tools to negotiate the final interest rate, covenants, and other issues that
will come when applying for a business loan or other type of business credit
facility.
As part of your loan
application, you should also have a clear understanding of your current
financial situation. This includes understanding your current net worth, current
assets, current liabilities, and other financial matters that apply to you
personally as well as to your business. In today’s economy, you are almost 100%
guaranteed to have your financial institution review your personal financial
matters alongside those of your business.
If you are having difficulty
with preparing the appropriate documents for your business loan then you should
seek the advice of your accountant to assist you. Your CPA will be able to
prepare the required financial statements discussed above in a manner that is
compliant with banking lending rules and regulations. Additionally, your CPA
will be able to advise you on which type of business loan is most appropriate
for you.
Finally, we cannot stress
enough the importance of the business plan. Although lending standards vary
depending on the financial institution, most experts agree that about 1/3 of the
lending decision is based on the quality of the business plan, your ability to
showcase the usage of debt funds, and your anticipated financial results for
your business during a three to five year timeframe.
As the financial and lending
markets have remained very unstable over the past three years, it is imperative
that you focus on potentially seeking alternative forms of financing so that you
are not completely reliant on a SBA loan, conventional business loan, or
specialized lease financing. As such, you may also want to consider whether or
not if it may be in your business’ best interest in seeking a potential outside
equity partner that can assist you with either entirely financing your business
or by assisting with the requisite down payment that is needed for a SBA loan or
conventional business loan.