How to Clinch a Small Business Loan

March 27, 2012 by  Filed under: Loans 

You can get a small business loan to finance your business operations from various sources. While shopping for loans, you will realize that the lending terms vary from lender to lender. Therefore, it is advisable to compare the pros and cons of the lending requirements of the different lenders before securing a small business loan.

Difficulties in obtaining small business loans

Most traditional lenders, other than the ones that cater specifically to small businesses, consider funding businesses a risky proposition. While it is comparatively easy for established businesses to obtain loans for financing existing operations or expanding businesses, lack of experience in running a business is often cited as a major risk factor by banks and financial agencies while turning down requests for loans from small start up businesses. Difficulty in obtaining loans is often exacerbated by poor credit ratings. Without sufficient collateral, you can hardly expect traditional lending institutions to accept your small business loan request.

How to get a small business loan

To clinch a small business loan, you need a sound business plan. The business plan should provide answers to all the queries your lender is likely to ask. It is necessary to give an accurate estimate of the amount of capital you will need for financing your business. In detail, describe how you will distribute the fund among the various business operations such as the amount of money that will be assigned for inventory, marketing, salaries of employees, advertising, building assets and maintaining cash flow. With the help of the cash flow projections of the business plan, you should convince the lender your ability to repay the loan.

What happens if you don’t get the loan?

Do not be discouraged if banks and financial agencies reject your loan proposals. Even with minimal or no business experience, poor credit rating or insufficient collateral you can obtain a small business loan. Nowadays merchant cash has emerged as a more suitable alternative to traditional lending sources. The lender advances a lump sum amount in exchange of a fixed share of the future credit/debit card sales of the borrower.

Merchant cash advance is usually a flexible source of finance. It doesn’t require extensive paperwork to obtain funds for businesses. These businesses can benefit from the flexible repayment terms. They do not have to pay a fixed amount every month. Instead, they will pay less when their cash flow dips and the lender can recover a significant amount of the fund during peak sales periods.

If you want to avoid a lengthy loan process with hidden fees and no guarantee of approval, use simple and straight-forward process for Business Loan. A merchant cash advance is a great borrowing decision for many Small Business Loan.

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