To be successful in obtaining a loan, you must be prepared and organized. You must know exactly how much money you need, why you need it and how you will pay it back. You must be able to convince your lender that you are a good credit risk.Take time to talk to your banker about your financial needs. Each bank has different requirements and time frames. Keep in mind that looking for financing is like obtaining any other commodity - shop around!
Approval of your loan request will depend on a number of variables. Improve your chances of obtaining a loan by preparing a written loan proposal. Your loan proposal should contain elements such as a comprehensive business plan, statement indicating purpose of loan, amount of loan, list of collateral, cash flow projection, and, if an established business, a balance sheet and income statement for previous three years.
Most importantly, does the business have sufficient cash flow to make the monthly payments on the loan request? If not, is there a secondary source of funds available to service the debt?
Use this outline to determine how much money it may take to start your business.
|1.||Land / Building||$|
|2.||Machinery and equipment||$|
|3.||Furniture and fixtures||$|
|4.||Inventory and raw materials||$|
|5.||Miscellaneous start-up expenses||$|
|6.||Anticipated operating cash required
(Accounts receivable, wages, etc.)
|7.||Total Project Costs (Add lines 1 through 6)||=$|
|8.||Amount of personal funds you plan to invest||$|
|9.||Amount invested by other partners (or investors)||$|
|10.||Total investment (Add lines 8 and 9)||=$|
|11.||Amount of loan (Subtract line 10 from line 7)||=$|