How to Raise Money From Banks for a Business

It takes money to start a business and a plan to acquire the money. Developing a sound strategy before seeking the financial resources necessary to efficiently run your business can provide you with the tools essential to attaining the funds that you need.

Instructions

Difficulty: Moderately Challenging

1. Create a loan proposal. Be as detailed as possible so the loan officer does not leave your meeting with questions in his/her head. Some basic components of this proposal include: the company overview, statements of income and balance sheets, and an explanation of the need for funds and how they will be used.
2. Study what the bank is looking for when deciding whether or not to invest in a business. Amount of personal finances you invested, your credit worthiness, the qualifications you possess to successfully operate a business and your financial ability to repay the loan are factors they consider.
3. Decide whether a short-term or long-term loan would most benefit your company. Short-term loans usually have a 1-year maturity and are used for day-to-day business needs. Long-term loans have an average 10-year repayment period. This type of loan can be used for major purchases such as furniture and vehicles.
4. Compare and contrast the loan terms (interest rate and repayment timeline) at a variety of financial institutions. Begin with your personal bank. In many ways your personal finances and the finances of your business are regarded as two separate entities, but this can make it easier for the loan officer to evaluate your financial standing.