10 Things I Know About...Securing a Business Loan
Bob Gallo.
Gallo is vice president of business banking at Fitchburg-based Workers’ Credit Union, www.wcu.com.
10. Legal Entity
The business venture must be a legal entity providing a viable service or product.
9. Formal Plan
Most lenders require a formal business plan, which should include a description of the business, personal resume of owners, competitors, profit and loss statements or projections, balance sheet, and how the requested funds will be used.
8. A Commitment
of Capital
Be prepared to personally invest a minimum of 10 percent of the purchase or start up cost in the business.
7. Cash Is King
Lenders require borrowers to detail how they’ll repay the loan, including the sources of revenue.
6. Excellent Credit
Establish and maintain a good personal and business credit history.
5. Personal Endorsement
The majority of business loans require a personal endorsement or guaranty.
4. Provide Collateral
Collateral, although not the most important factor in securing a business loan, will speed the loan process.
3. Relationships Count
Establishing a relationship with a lending institution through personal deposit accounts and loans is important. Your personal finances are a good indication of how you will handle your business finances.
2. First Impressions Count
In the first meeting with your lender, be as prepared as you would for a job interview. A good impression goes a long way.
1. Alternative Lenders
Contact organizations that help businesses obtain financing, such as the SBA (Small Business Administration), local chambers of commerce or community development corporations. They can often help you secure financing through guarantees or micro loans for a portion of the project.
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