Business loans to get your own small business started.

Depending on banks or pestering friends and relatives to generate money for your business is a phenomenon of the past. The array of alternatives available to finance your small business was never so assorted and versatile as it is today. There are a multitude of options available to the small business owner for all types of requirements whether it is to start up a small business or for the growth of the business.

The small business loans can be studied under three basic categories:

* Short term business loans: these loans can be used to provide for the capital required to startup the operations of the business and the usual term for paying them back is one year or less. In case this type of loan is to be used to generate the initial capital required, it must be used only if your business is expected to break even within the first year. These loans can also be used to meet up with the seasonal requirements of a small business.

*Intermediate term loans: These types of loans are ideal for the purchase of the extensive equipments and also to cover up the initial large expenditures. The normal term for these loans is usually between one to three years.

*Long term loans: with these loans a business can manage all the startup costs such as purchase of equipment, furniture, fixtures Etc. These can also be used to assist you with the Commercial mortgage. The term of these loans is mostly between three years to seven years.

It is essential for the business owner to understand clearly the purpose for which the loan is to be used so that before approaching the lender he knows exactly how to present the information in the best possible manner. What is equally vital is how realistic the plan is and whether or not repaying has been taken into consideration while planning.

Some of the information that you need to extract from your business plan to make a more acceptable loan application are:

* The main objective or rationale based on which the loan is being taken. It is important to convince the lender about the purpose of the loan.

* The amount of money required must be very specific and should have been arrived at by using elaborate calculations after weighing the circumstances, the exact needs and having ascertained the pros and cons of taking the loan.

* The management profile should be mentioned in the request; a good management profile will have a positive effect on your loan request.

* You need to elaborate out on the market and the projections that you are making in terms of the customer base and the competition.

The personal and business financial statements should be attached to the request along with the details of the collateral which will serve as a security for the loan.

Most of the lenders are interested to know if the owner of the business, who is requesting the loan, is investing a proportionate amount of his own money into the business venture. And at times the lender may also be interested in knowing about the other sources of finance that have been used by the business owner.

Documentation is an important part of your loan application, and you should have some amount of funds ready to be spent on the loan documentation. Some of the documents that you will require are mentioned below, but apart from these your specific lender may require additional documents.

* The incorporation document which in some cases is referred to as LLC organizational document.

* For businesses which have been purchased, a proof of ownership such as the sale agreement will also be required to be furnished.

* The contracts related to material supply.

* Reference letters.

Financial statements of the business as well as the personal statements of the business owner, specifically the personal tax returns that have been filed for the past three to five years along with a list of assets and liabilities must be submitted.

In case of an already running business where a loan is being taken for growth reasons the tax returns of the business are also required.

Your small business loan will get approved only if it satisfies the eligibility criteria and the requirements of the lending institution. If your loan request gets rejected by one lender it doesnt call for a change in your loan request, the business plan or the documentation. You can move on to the next lender and the same documents may be able to get you a loan easily. But surely you may want to check once why the application was turned down in the first place. And if your application gets turned down the second time then it is surely time to check out your application. Whenever a lender turns down a loan request he will inform you, upon request, the reason for it, and this will serve as a guide to reframe your application.

The problems could be related to your credit rating or your business plan or at times to the documents that are submitted.

Ideally you should proceed with only those lenders whose terms are the most comfortable for you. The type of loan to be taken should be based on your current situation and the future business projections. You need to see how much you can pay and when for the repayment of the loan. You have to correlate the loan payments schedule with the projected cash flow for your small business.

An increasingly important aspect of taking a small business loan is the interest rate, your efforts should be centralized on getting the best possible going rate for similar loans and dont forget to negotiate for the interest rate. In some states there is a directive by the law which sets down the maximum amount of interest that can be charged on such loans.

Apart from the interest rate there are other fees associated with taking up of a loan, these are normally detailed out in the loan agreement and you must review all such fees. Mostly these fees are common across lenders and the chances of negotiating on these or even getting them waived off is quite possible.

Lastly, all that matters is proper planning to ascertain your needs and to put yourself in a better position and thorough investigation of offers to strike the best deal possible.