Guaranteed Online Personal Loans

The Number One Key Is Preparation

Okay, you have the ideas, the desire and the plan. At this point it all seems very clear to you and all you need is the money so you can move forward. Are you prepared to present your plans and documentation to banks and financial establishments?

In order to prove that you’re worth the money, you’ll want to prove yourself. First, your personal credit history is relevant to your small business loan, especially if your business does not have a long operating history.

They will assume that you operate your business in the same manner that you manage your personal finances. Bring your credit history with you to reference as necessary. Also, bring financial statements for your business.

You need to show your business’s financial health. They want to know how much it’s worth and how much money you’re moving. If you are serious, then you’ll also want to prepare detailed questionnaire statements.

These give projections about what your business will be worth going forward. Banks award small business loans to those that have everything spelled out and planned. Have a plan with as much detail including bios of you and your partners, your track record, your strategies and advantages.

Choosing Banks For Small Business Loans

Start with institutions that you already do business with. These places know your history and financial behavior. If you choose not to do this then go to somebody who wants the business. Search the business section of your newspaper for financing offers.

These banks are actively looking for small business loans and the process may be easier with them. Another choice is to ask at credit unions because these institutions are smaller and you may be able to talk directly with higher-level decision makers.

What If You Are Unable To Obtain A Loan Through Any Financial Institution?

Unless you have rich parents, grandparents, or win the lottery you have to look at a different way to obtain the needed money to start your business. The next best idea, and in some ways, a great idea is a home equity loan.

It all depends on how much equity you have in your home. If your residence has around 20 percent equity and 80 percent loan outstanding on its value, then this strategy should not be considered under any circumstances.

On the other hand, if you are a longer-time homeowner with more than 50 percent of your home’s value as equity (the loan outstanding is less than half the market value of the house), there is a way to figure out if borrowing from your home can work to provide capital for your business.

The following example will shed some light on this. Consider a home valued at $200,000 with $80,000 in total debt outstanding and $120,000 in equity. Borrow $50,000 at 7 percent interest only so monthly payments are around $300 for $3,500 in annual interest due.

The business will be able to show pre-tax profits of around $5,000 per month and can easily cover the $300 interest. Each month, the business pays the $300 in deductible interest and an additional $2,000 in principal reduction.

At this pace, the entire loan could be paid back in about two years, the business gets some much-needed capital, and the personal resident regains the $50,000 in equity. So this plan would work out fine if the pieces, house, and equity plus owners all fit.