How to Get a Loan to Open a Business

Getting a loan to start a business can be far more difficult than getting one to expand it. Business startups have no previous credit history and no financial statements to reflect their credit-worthiness and chances of success. This makes it very important for those trying to start a business to plan ahead, save as much money as possible, and protect their personal credit ratings. It is possible for a business startup to get a bank loan, but the process requires borrowers to do their homework and be prepared when talking to potential lenders.

Things You'll Need

• A detailed business plan
• A CPA or another professional business adviser
• Proper business attire

Instructions

1. Write a detailed, credible business plan that includes projected financial statements. Banks and other potential lenders will want to see this plan, and won't take you seriously unless you have it. If necessary, get the help of a Certified Public Accountant.

2. Check your personal credit and fix any inaccuracies. A business that hasn't started yet doesn't have any credit rating of its own. This means that the bank's decision about lending you money will depend on what you have done with money in the past, not what your business might do with it in the future.

3. Be prepared to use your personal home or other property as collateral.

4. Dress the part. When meeting with potential lenders, look like the professional business person you want to become. Blue jeans and sneakers don't cut it.

5. Take reinforcements with you to the bank. Bringing a CPA or other professional business adviser with you shows you are taking your new business seriously and doing your homework. Your CPA or other advisers may be able to offer specific and detailed on-the-spot answers to questions.

6. Be honest and realistic when talking to potential lenders about your business plan. Lenders want to see that you have a viable plan that can succeed. Fluff and an overabundance of optimism will make you look amateurish.

References

• My Own Business, Inc.: How to Finance Your Business
• Business Know-How: Business Loans for Start-Ups How to Get Approved