The Basics Of How To Run A Successful Business - Getting A Loan
After a while of making a profit and providing products and services that have given your company a great reputation, maybe you're thinking it's time to turn some concrete slabs into an additional company or make an acquisition. Whatever direction of expansion you choose to go in, the inevitable next step is coming up with the funding.
Besides using credit cards or hitting up family members for their savings, there are many avenues to getting money. Most of those ways involve a lender, and how you present yourself will determine how successful you are at getting the needed bucks. With a clear picture of the loan you want and a sharp business plan, attaining the funds for your business' growth can be done minus the growing pains.
Selecting a Lender
The first step to getting a loan is selecting a loan officer. There are several kinds of SBA lenders to choose from:
Preferred: This lender can approve a loan without the U.S. Small Business Administration, but needs their stamp of approval. After a preferred lender approves a loan and submits it to the SBA, it will get turned around within 24 hours.
Certified: These lenders are not experienced enough to approve a loan by themselves, but because they have some experience, will be processed by the SBA within one week.
Regular 7a: This is the most inexperienced of the three lenders, and cannot approve a loan without the SBA. However, because of their inexperience there is no set time for the turnaround on a submitted loan.
The time it takes to get a loan also depends on its dollar amount, but the average time an applicant should expect for a loan to go through is approximately 30 to 60 days. You can probably get an answer under 30 days, but getting everything squared up with contracts takes a longer time.
If you are not interested in a SBA loan, then another option could be to go to a local bank. Beware that the recent bank semi-meltdowns have tightened business credit to a level previously unimaginable. Get ready for a lot of turndowns and frustration but if you persevere, you may get your loan. Or you may not. If you go to a local bank rather than the SBA route that could mean a higher down payment. All banks classify new business loans as risky. If you go to the bank, you're generally facing having to put 35 to 40% cash in up front.
A SBA lender can usually knock this percentage down a bit, especially if a loan is being requested for a well-known franchise. With this all in mind, after you have selected where and with whom you will be applying for a loan, you should contact a loan officer to ask for what you need to bring to the table. The usual requests will be for you to fill out an application and also present a business plan.
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