How to get a business loan – Free eBook
HOW TO GET A
BUSINESS LOAN
A guide to preparing a winning loan request
FINANCING | CONSULTING
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HOW TO GET A
BUSINESS LOAN
A GUIDE TO PREPARING A WINNING LOAN REQUEST
TABLE OF CONTENTS
YOUR STEP-BY-STEP GUIDE
4
01 WHAT A BANKER LOOKS FOR
5
Banks want to know you're a good risk
5
Questions your banker will ask
5
02 WHAT ARE YOU LOOKING FOR?
8
It isn't just about the interest rate
8
Common mistakes when borrowing money
10
03 CHOOSING A BANK AND
PREPARING TO NEGOTIATE
12
Shop around to understand what's available
12
Set clear objectives
13
Know your ratios
14
Don't forget your credit scores
15
Consider diversifying your lenders
15
Collateral
16
Types of collateral
16
Which type of collateral should you offer?
17
04 IF YOU ARE A START-UP
18
Intuitive versus methodical
18
Establishing your credibility
19
Your business plan
21
05 ONCE YOU HAVE YOUR LOAN
24
When trouble strikes
25
THE FUEL
YOUR COMPANY NEEDS TO GROW
27
YOUR STEP-BY-STEP GUIDE
Bankers are just like other businesspeople. They're always on the lookout for new clients and can't remain in business if they don't sell their product. For a bank, that product is money.
However, bankers also have valid concerns about whom they loan money to. As an entrepreneur, you have to understand and respond to those concerns if you want to present a solid and persuasive loan request.
It's in your interest to make it easy for a banker to lend you money. This guide gives you stepby-step advice on how to do that and, hopefully, get the business loan you need to finance your company's profitable growth and success.
HOW TO GET A BUSINESS LOAN 01 | WHAT A BANKER LOOKS FOR
01_ WHAT A BANKER
LOOKS FOR
BANKS WANT TO KNOW YOU'RE A GOOD RISK Banks are in the business of loaning money, but extending a loan carries risk. That's why bankers will carefully evaluate your ability to repay your loan.
You must demonstrate you have the experience, skills, determination and self-confidence to successfully carry out the project for which you're borrowing money. If you don't believe in yourself, your business and your project, why should a banker?
In its risk assessment, a bank isn't looking only at your ability to execute a project and repay the loan. Your banker will also consider the project itself and ask: "Is this the right decision for this company? Will it contribute to its profitable growth in the years to come?" Therefore, the business plan for the project you want to fund must be clear and succinct.
QUESTIONS YOUR BANKER WILL ASK Bankers look at a number of factors to assess your project's viability, including the following questions.
Do you have financial strength?--Bankers will want to see financial statements and assess your business's net worth. This will help them judge your ability to meet your obligations and repay a loan from business earnings. They will also look at your credit history.
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