09/21/2017

What to Expect When Applying for a Small Business Loan

If you’ve decided to set up a small business, congratulations. This means that you are a risk-taker, unafraid of the current economic climate and forecasts, according to which the global economy is still far off from the route of recovery. There is one strand of crisis theory, though, which chooses to regard a difficult or otherwise challenging situation as potentially benefactor, especially for risk-takers, entrepreneurs and adventurers. According to this theory, it is easier to succeed during a time of crisis. A crisis, be it economic or otherwise, is a natural process of selection, so to speak, which sifts through businesses and only allows the truly strong and valuable ones to survive. As such, if youíve got the capital to start something new now, you are highly encouraged to do so, at least by some economic theorists. The issue of capital accumulation for starting up the business still remains, however. If youíre strapped for liquidities and are trying to figure out where you can get money for your upcoming venture, try consulting a mortgage calculator online or looking up other sources of funding. What sources of loans and/or crediting are available for you at present? How do you access them? Find out below.

  • Prepare a Solid Loan Request Letter

Though available in some regions of the country and for various types of small enterprises, government loans are not always the best solutions for amassing the money you need in order to start your business. Always remember to keep your options open, no matter your outlook or plans for the future, be they connected to business or not. Look into banking loans or credit lines offered by other types of financial institutions. Credit angels, organizations and charities which offer grants, or even bridging loans are all workable options for getting the money you need. However, all of them require you to write a good, believable, documented and researched loan request letter. Your letter should include information on how you plan to use the money, how and when you expect to repay it and a professional summary of your proposed business strategy. This letter will be thoroughly analyzed and verified.

  • Hope for the Best, Expect for the Worst

The state of the economy has also affected the leniency of banks and other crediting institutions with respect to granting credits. If three years ago, they were readily available for almost everyone, times have now changed. Obviously, this means you have a fair chance of not getting your much wanted loan. If push comes to shove, remember you have backup and alternative solutions. Always ask for detailed explanations on why your application was denied. Though you might not agree with every single argument you receive, chances are the other creditors you file with might agree. For this purpose, the feedback you get from those who reject you will help you put together a better proposal for your other requests.

  • Sacrifice

Setting up a small business requires a lot of sacrifice from the part of the one who comes up with the idea in the first place. Expect to go quite a long span of time without a holiday, and even without a regular salary, as you work your way toward profit.