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.

BDC.CA

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