| |
Five Tips to Obtain Credit for Small Businesses
By Monique Hawkins
Copyright 2005 Monique Hawkins
As many small business owners know, financing is crucial to the financial health of their enterprise. While some small business owners have the resources to launch their business, most look to the credit market for financial help. Indeed, the banking industry is an important source to gain necessary capital. However, many entrepreneurs may not realize that that applying for commercial credit requires a great deal of preparation. Here are five tips to assist entrepreneurs in improving their chances of getting credit approval.
Tip #1: Decide on the type of commercial loan that is needed. Loan options include short-term loans, intermediate loans, long-term loans, and lines of credit.
Short-term loans are usually for less than a year. They typically provide interim working capital for a business temporarily in need of cash.
Intermediate loans are often used for business set-up, the purchase of new equipment, expansion, or an increase in working capital. This loan can be anywhere from 1-3 years.
Long-term loans are for major capital improvements, acquiring fixed assists, and business start-ups. The loan term is usually from 3-5 years and repayment installments are on a monthly or quarterly basis.
A line of credit gives a small business the ability to borrow money repeatedly, up to the credit limit. The lender will usually perform a review once a year, at which time the borrower is asked to update financial statements.
Tip #2: Make sure all paper work is in order. Applying for commercial loans can be very tedious and requires much more documentation than applying for consumer credit. So, the key is to be prepared. In addition, entrepreneurs who have carefully put together the needed paperwork to include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal will be viewed more favorably by many lenders.
Tip #3: Develop a well thought out proposal. The proposal should include the loan purpose, the amount of money needed and for how long, and a repayment schedule proposal. Points to include are the business description that tells the nature of the business, product and service, a personal profile, and a business plan that outlines the corporate strategy for the next three to five years. Additional points to add are supporting documentation that supports the information outlined in the proposal, and collateral that will be used to secure the loan. Financial statements, both personal and for the business, are important as well.
Tip #4: Seek advice! It is important for entrepreneurs to talk with someone who has gone through the process of obtaining commercial credit before a lender is approached. This is especially important for the first time buyer. Entrepreneurs can approach mentors, qualified business counselors, business support groups, and the U.S. Small Business Administration. This step will increase the chances of getting a favorable credit decision.
Tip #5: Be prepared to pursue various options. Sometimes, financial institutions will say no. Once again, obtaining credit can be difficult, especially for entrepreneurs who are first-time borrowers. However, since financial institutions have different standards, an inability to meet the standard of one lender does not mean one fails the standards of all. It is highly possible that credit approvals can be gained with another lender. So, it is important to keep seeking until a lender is found.
Obtaining credit is necessary for many small businesses. Knowing what steps to take in this process can greatly increase an approval from a financial institution. Now, put these five tips into practice and be on your way to getting the credit you need for your business venture.
About the Author
Monique Hawkins is the owner of the online music box store; "Monique's Music Box" located at http://www.my-music-box.com . She enjoys sharing information with business owners that will help them attain success. For additional assistance from one of the most respected markets around today, Jay Abraham, visit: http://www.abrahampublishing.net/app/?af=274476
Article Source: http://www.simplysearch4it.com/article/14278.html
| If you wish to add the above article to your website or newsletters then please include the "Article Source: http://www.simplysearch4it.com/article/14278.html" as shown above and make it hyperlinked. |
| Some other articles by Monique Hawkins | Simple Tips for Easy Weight Loss, Part I
Copyright 2005 Monique Hawkins
Current statistics reveal that 75% of Americans are overweight and 40% are obese. For those who desire to lose weight and obtain optimal health, sometimes it can be overwhelming trying ...
How to Find Antique Collectibles
Copyright 2005 Monique Hawkins
Are you an antique collector? Are you a serious collector that is looking for a specific antique such as a certain piece of furniture, a unique car, or perhaps a specific antique ...
Four Tips for Finding Top Niche Markets
Copyright 2005 Monique Hawkins
If you want to make it in the Internet business world, you need to know how to find top niche markets. ...
Tips to Supercharge Your Small Online Business
Copyright 2005 Monique Hawkins
Are you planning to start your own small business? Are you beginning an online business or turning ...
How to Find Rare Music Box Collectibles
Copyright 2005 Monique Hawkins
Are you a collector? Do you happen to collect rare music boxes? Seeking to find the perfect ballerina music box for your ballerina room décor? Looking for beautiful inlaid ...
Are All Vitamins Created Equal?
Copyright 2005 Monique Hawkins
Everyone has read the reports and seen the news. Our soil is depleted and lacks the necessary nutrients and minerals that our bodies need. ...
|
|
| |
|
