Small Business Loan Step By Step

Whether you are planning a larger market, improvements to a small existing business or start a business from nothing, loans to SMEs (Small and Medium Enterprises) can give you the necessary financial support. All businesses are unable to get a loan, so you must be especially careful when you apply to get one. Ensuring that all information you provide is as accurate as possible and presenting your business in its best light, you greatly improve your chances of getting that loan.

Highlight your best financial assets.

1. Obtain a copy of your credit report to make sure it is accurate. 

You can even get a copy of record of all major credit card companies in the country. Most financial institutions check your credit report at the same time they examine your loan application. 

2. Gather some basic financial information. 

When selecting a loan, the lender must ensure that you will be able to repay. Here are some of the key financial documents are required:

•      A complete state of your accounts over the last 3 years. This includes, but not necessarily so limited, balance sheets, income statements and bank reconciliations.
•      The current state of the accounts. It must not exceed 90 days.
•      The status and timing of your debts, and the distribution of your accounts payable and receivable (distributed monthly and at least the last three months).
•      If you are just starting your business and you need a loan, provide your complete financial forecast, with balance sheet and income statements.  

3. Make a projection of future exploitation.  

This projection of the status of the operation must be done on at least one year or until you reach a positive financial result if it takes longer. It is strongly advised when starting a business, preparing the financial forecast for the three years to come. You can use the types of tools. By typing eg "report profit and loss over 12 months" in your favorite search engine, you get tips and tools for presentation and calculation preformatted which are well suited to SMEs, with which you can work without worries .

     Try to follow the standards of the industry in which you operate when you make your financial projections. If you do not follow these standards or you do not know them well justify all the assumptions you bring up in your forecast.

Finalize your request.

1. Ask the financial institution what specific documents you will need.  

Also ask what additional information is necessary to the lender. In lending to SMEs, applications vary depending on the institution. The following list provides a quick overview documents you can expect to have to provide the lender. 

2. Write an executive summary, if you have not already done so.  

It should include information about your background in the field of business, a summary of your business, the amount you are asking and what you intend to use, not to mention how you plan to take to repay the loan. 

3. Provide the curriculum vitae of each partner of the company and that of each member of the management team.  

Do you and your team already have a positive experience to turn a loan benefits? You need to keep your ship afloat until you have not finished paying off the loan and it is the presence of this ability in that lenders want to check. Have a look at the track record of the team can help them get an idea. 

4. Write a company profile.  

This document provides potential lenders with a better understanding of the specifics of your business and its operations. Even if a company profile may cover a wide range of information, you will shape this document to highlight issues that may be of interest to potential lenders. These include: Basic information about your business: the area in which you work, where you are based, a brief summary of the history of your company and also the products and services you offer. The financial information on your business: the amount of annual wages, future developments and also the current and future competition. The constitution of the company: the total number of employees, demographics and volume of your clientele and also all relevant information about your suppliers. 

5. Write a loan proposal that makes the corollary between the exact use of the borrowed money and the amount requested.  

Again, each institution will have its own requirements, but it is generally more information about your marketing technique, your positioning relative to the market and the legal structure of your business.

6. Roll up your sleeves and brace yourself for completing the forms requested.

There are many funding schemes depending on the position of your business, so choose the one you feel appropriate and pay special attention to the administrative part of your application, which is just as important as the financial aspect, especially if you choose to use a state machine. Feel free to bring someone with you, by going to the existing structures, such as retail management or chambers. They will advise you and guide you to the right people, whether private or public.

7. Highlight how you will repay your loan.  

If for you, the most important thing is to get this loan, the potential lender will, him interested in the refund. Provide the following documents you can show the lender that you are a serious borrower.

• Your tax refund loan. Briefly describe how you will take to pay off your loan, with particular emphasis on your repayment sources and deadlines that you will comply. Other documents you provide to the potential lender you will support the repayment schedule that you set.
• Indicate separately to your tax refund loan so, what are your insurance in the event of default (most loans today require a deposit, which can be realized in different forms depending on the lender). Prepare to have at least two fallbacks to repay your loan, such as the existence of a secondary income, the security of a family member (which will be most in demand in loans for small amounts), or in some cases a mortgage. 

Submit your application and get a loan.

1. Check with the lender to get an interview with an agent specializing in relations with SMEs and bring all required documents and information listed above with you.  

During the meeting, review all documents with the agent to thoroughly check all well they match the demand. Although this step is often optional, this may be a good idea if you have never made ​​a loan request before.

2. Send documents and candidature for the right person and address.

3. Wait to hear from the financial institution.  

Know what potential lenders are looking for when they review your application. Here are five keys that will determine, among other things, your ability to get a loan SMEs

•      Whether you have invested enough equity in your business. Borrowers who have taken the risk of investing capital in their projects are generally more likely to repay their loans.
•      Whether you have sufficient cash to support financial operations of your business. The fact that your cash inputs are greater than your expenses is important to verify that the loan can be repaid in a timely manner.
•      Your working capital. This is the difference between your assets and your annual liability. Clearly, more working capital is high, the easier it is to get a loan.
•      What you have planned next. What will you choose to give up if you fail to repay your loan?
•      Plan effective management of resources. Resource management is the management of goods and services every day, as your means to settle your debts and the rate at which they are collected you. 

 4. If the loan is not granted, consider splitting your loan.  

Learn about existing programs surety or subsidized loans. This type of action is used to provide guarantees on loans or financing on favorable terms a sum which will be a part of the contribution from the borrower to the private lender. You will often mount the two files in parallel and wait for the two institutions get in touch then, but this can be a good way to reassure the lender.
     If a lender rejects your application ready and you live outside the French territory, ask about existing in your area specific measures. There are even within the country, some specifics on aid to finance for SMEs: some areas, such as the outermost regions, do not necessarily have the same accompaniments of accompaniment of economic activity in the territory. So you'll have to find out about existing devices from your Region.

5. If the traditional banking and institutional loan arrangements does not work, check with private financial institutions.  

Banks are, in fact, sometimes not easily accessible to family  businesses, particularly because of the number of guarantees they require. There are private lenders specialize in lending to people who do not have access to bank loans. They often charge higher than banks interest rates, because of the risk involved. It's up to you to do your homework, because if high interest rates may at first seem prohibitive, they receive less in small amounts. Some of these organizations, as ADIE are even associations that work closely with public institutions and form part of the official support entrepreneurship course. Getting a home loan can be used to start a business and thus prove its ability to repay.