How to Apply for a Business Loan

Money to expand a business can come from a variety of sources. Most require you to provide a thorough financial profile.

Difficulty:

Moderately Challenging

Instructions

Things You'll Need

• Internet Access
• Banks
• Business Loans
• Computers
• Business Plan Software
• Business loans

1. Determine what the uses of a loan will be and the amount you need.

2. Decide on the type of loan you want and whether you want to obtain it from a bank, the Small Business Administration or another lender.

3. Update the company's balance sheet, indicating the current status of assets, liabilities and equity.

4. Update the profit-and-loss statement with a summary covering the company's expenses, revenues and costs for a particular accounting period.

5. Develop cash flow projections for at least one year, showing how money will flow in and out of the company quarter by quarter.

6. Contact prospective lenders and ask them for an application. In many cases, the quickest way to accomplish this is in person, although it can also be done via e-mail, fax or mail.

7. Consider consulting with legal counsel to aid you in reviewing loan documents and their stipulations.

Tips & Warnings

• If two banks turn you down for a loan, you can apply to one of the Small Business Administration's many loan programs.

• Apply for a line of credit at a bank well before you actually need the capital.

• Business owners with few business assets can expect to put up personal assets to secure a loan.

• Be wary of lenders that want to secure your intellectual property as collateral for your loan.