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The financial crisis might have given you the idea that there is no funding available for small businesses. But that is a myth. There is available funding for small businesses and the best way is to apply for small business loans. However, getting access to the funding is not easy, especially if you are unprepared. Like in any other venture, preparation is key. Here are some steps that you can take to prepare for the loan application. 1. Prepare a good spending plan. A spending plan is one of the first things the financial institutions will look for. Lenders need assurance that they are not throwing away money and that they will be paid back. A well-organized and well-thought out spending plan will let the lenders know that you are going to use the business loan to improve your business. 2. Prepare your documentary requirements. Lenders usually have a checklist of documents that loan applicants need to submit. Organize and compile the original documents and make copies for submission to the lenders. Organized paperwork will let you answer any questions promptly and will impress the lenders. 3. Project how much money you need to borrow. Lenders will ask you how much you need and they do not appreciate and are not impressed by the answer “it depends on how much you’re going to give me.” This answer is an indication that you have not thought the business loan through. Having an amount in mind, and if possible supporting that with a cash flow projection will give the lenders the impression that you practice responsible accounting. 4. Familiarize yourself with your balance sheets and your income statements. Lenders want to know that you are on top of your finances. They will use your revenue statements to determine the business loan approval amount and the payment terms so you should know exactly how your business is doing. 5. Don’t lie or keep secrets from lenders. Financial institutions will research your financial background and they will find whatever it is that you’re hiding. Keeping things from your lenders will only delay the process, or even ensure a denial. 6. Ask questions about the process. The lenders will often forget minor details but they will expect you to be prepared for anything like site visits or interviews. Do not be caught off-guard. Ask questions so you know exactly how long the process will take and what it entails. 7. Read the terms and conditions. Make sure that you know exactly what you’re getting into. It is best to know everything from interest rates to processing fees before you go through the application process and end up getting shortchanged. Applying and receiving a business loan is serious process and a borrower should be prepared before beginning the process. Although it may be difficult to get business financing, there are many opportunities available today. The more prepared a borrower is the more likely he or she will receive business financing.
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business loans, small business loans, applying for business loans,
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