Okay, so you are pretty much high on the clouds! You have
a brilliant business idea and you just want to get on with that.
You have all the necessary things in hand, i.e., business name,
intellectual force and management plan but sadly you don?t have
the required funds. There is this major obstacle ? raising funds.
And that is where new business loans can channelize your business
initiative in the right direction.
New business loans are a big responsibility. As a matter of
fact a proper new business loans is fundamental to starting
a business and ensuring its expansion. In general, raising money
for new business will not be possible without proper information
and preparation. The most normal source of new business loans
funding comes under banks and credit unions. There is no requirement
to believe that new business loans are harder to procure.
It is of utmost importance that you prepare written proposal
especially if you are looking for new business loans. Furthermore
approval of business loans considerably depends on how well
a proposal is written by you. Fact remained that you would not
find new business loans if you falter in your presentation.
Remember that every lender will be looking for repayment when
he is making a decision about extending new business loans.
A written proposal will consist of general information and details
about financial status.
Theoretically speaking business name, name of proprietors, with
their social security numbers will constitute the general information.
Facts and figures about the new business loan, the amount required,
its purpose and usage will be imperative. Moreover, it is advisable
that you mention the nature of new business you are trying to
venture in. Give some information about your education, experience,
skills and achievements. In addition your personal financial
statements and of partners will be required. Most importantly
don?t forget to give details about the collateral you are offering.
If experts are to be believed, new business loans proposal will
be practically incomplete without business projections. Business
projections in general will include details about how positive
cash flow will be achieved. It is quite mandatory that you give
information in the profit and loss figures explaining income
and expense. You can also provide concrete examples, easily
identifiable from industry standards. Write in such a way that
can be demonstrated with industry standards and which is easily
Next, new business loans can be either long term or short term
depending on your financial demands. Talking about short-term
loans, it will have a loan term up to one year. On the other
side of the coin, long-term loans havenew business loanterm ranging from
1-7 years. What?s more this term can extend to 25 years in case
you are applying for equipment and real estate new business
loans. In addition entrepreneurs can get start up business loans
ranging from ?15,000-?250,000. Few of the lenders may be willing
to offer more as new business loans. Though, you should be able
to prove that you will be able to repay it.
An important factor to take into account regarding new business
loans lenders is credit ratings. Credit history as well as credit
score is the single most significant criteria that play a prominent
role in helping the lender to decide whether to provide the
borrower with the loan or not. Lots of people are practically
unaware of their credit score or whether they have a credit
score or not. In this regard three major credit scoring agencies
? Experian, Trans Union, Equifax ? will enable you to find your
credit score. It is quite mandatory that you check your credit
report carefully and see if there are any mistakes or changes.
They can be easily corrected in case if you happen to inform
the credit reporting agency. Fact remained that credit score
above 620 is considered good credit. On the other hand anything
below will start having problems finding credit on their terms.
Below 540 can be termed as bad credit. Most importantly new
business loans are available for bad credit borrowers. But,
only some of the borrowers are willing to work with them and
will come with the drawback of higher interest rates.
When beginning new business, dedication and passion are not
enough. You will come to know very soon that finances are something
without which your skills and efforts will not be suitably translated.
New business loans can offer you with the finance that you want
and get you the success that you deserve.
That is where business loans serve a variety of needs for both
new and established businesses. These kinds of business loans
come in a variety of options depending on the rate of interest
and the preferred repayment needs.
Generally, applying for business loans is a more involved routine
as compared to applying for a personal or home loan. The eligibility
criteria for a new business loanare evaluated differently and the
standards to be met are stricter than for a secured personal
Most crucially your options will also depend on the bank you
are dealing with; banks offer differentnew business loanpackages, each
with its\' own particular set of terms and conditions.
While there is no hiding the fact that you can check out what
your own bank has to offer, it is worth investigating the business
loans being offered by other banks as well.
For an established business, business loans give an option of
additional cash flows to provide funds for fresh purchases,
making essential payments for payroll and rent etc.
Apart from that business loans are also acquired to meet needs
of refinancing money borrowed previously from banks and other
Once you begin the loan application routine, banks and other
financial institutions become very interested in your creditworthiness
and credit rating, since this judges how much money they will
lend you and how much interest you will pay on the loans you
take. These ratings will demonstrate whether or not yours is
a high risk loan. In order to decide whether to get a loan or
not, you should take a careful look at your business\'s investment