SBA: Helping Small Business Owners Obtain Lending

By | March 18, 2017

Business owners are regular people just like you and I. They run into situations that require more capital then they have. How does an entrepreneur come up with funds when their small business is in need? This may happen in opening a small business or may present itself during an expansion whenever the need arises it is important to be aware of what you will need in order to prove to a commercial lender that you are a secure investment.

The small business association or SBA provides a lot of information on lending as well as tips and solutions for things that come up with running a business. One issue they cover in great detail is lending. There are several issues that can arise when a small business owner is looking for a business loan. Do you have the means to pay the loan back? Can you prove it to a lender and how? Clarifying a need for money and what they lent money will be used for is also needed. It is important to remember that lenders want to lend money but need to know that they are making a wise investment lending it to you. Your goal is to prove to them you are a worthwhile risk. The question is how one goes about proving this.

The SBA recommends that business owners have key information ready and available at all times for investors and lenders. People are rarely prepared to ask for money when the need arises so it is important as a business owner to be prepared at all times. The first step involves gathering information in the form of financial documents and a business plan to show lenders business goals and that you are a risk worth taking. The next thing they will need to know is that the business has the means to repay the loan. With cash flow data you will be able to prove to lenders that you have substantial resources to back up the loan.

Small business owners are at a disadvantage in some ways because they personally can be held liable for business debts. Often small business owners will need to not only prove the businesses financial means but also their personal means. Commercial lenders might be interested in seeing past tax returns that the business has filed and will also be interested in the company’s credit ratings. It is good for business owners to pull a credit reporting of their business every six months to check for discrepancies and to look for areas to improve on the credit rating. Higher credit ratings will ease a company’s ability to receive a loan because your credit rating is evidence to commercial lenders of debts that have been paid in a timely fashion. However a poor credit rating will do the opposite so you want to make sure that your businesses credit rating is in check before applying for a loan.