Small business owners face a number of difficult tasks, but one of the hardest is obtaining the funds necessary to operate the business. When businesses are started, owners may be able to rely on personal savings or help from family and friends. However, the business owner will eventually have to get a small business loan. Banks consider these loans risky, and business owners should be prepared when starting the loan process. Below are some factors lenders will consider.
The Business Owner’s Credit History
An important thing for small business owners to remember is that their credit history plays a role in their ability to get Business Loans in Vicksburg MS. Banks and other lenders closely examine the borrower’s credit score and history before making a decision. Business owners should get reports from TransUnion, Equifax and Experian before applying for a loan, to ensure there aren’t any errors.
Forming a Funding and Business Plan
Business owners shouldn’t go into the loan process without having an idea of how much money they will need for inventory, payroll, business supplies, land purchases and other assets. The borrower should have a business plan in place as well, which details the business’ type and feasibility. Most banks need at least five years’ worth of financial statements before making a loan, and business owners can base estimates on variables such as similar companies’ performance and inflation rates. The business plan requires research on the business owner’s part, and they may need an accountant’s help.
Profitability
The business owner must convince the Mutual Credit Union that the business will turn a profit, using the financial forecast referenced above. A business owner’s powers of persuasion here, along with financial proof, will convince the loan officer that repayment will be made on time.
During the interview process, a loan officer will likely ask the business owner what they’ll do if they don’t get the loan. The borrower should be ready with a good answer, and they should remain positive about the business. A good answer would be to tell the lender that they will try other Business Loans in Vicksburg MS until they find one that’s a good fit. Small business owners may have to make several attempts before they get the funding they need.
