A guide to small-business loans: Part 2
March 04, 2015

A small-business loan is beneficial for expansion or starting a new operation. When applying, it is crucial that you properly prepare and ensure that you have all the required materials on hand and ready to help the process go smoothly.

Knowing your monetary needs
Before setting up a meeting with a lending professional, take a look at your current finances and determine whether a loan is necessary, as suggested the U.S. Small Business Administration. If you feel that you need additional financial support for a development or expansion of your current business or the start-up of a new venture, it is important to identify any risks that may be associated with your investment and how much money is necessary to fund your plans.

Also outline exactly where your accumulated funds will be distributed. Determine your priority spending. For example, if you are starting a food truck, the most important aspects of your business might include:

  • Truck
  • Grill
  • Electronic payment systems
  • Food supplies
  • License and related expenses

Ensure that you determine a budget for each item and list the items in order of necessity. A truck is an essential investment for your particular business plan.

SBA noted that small-business loan amounts vary. Financial needs, experience and the size of the operation can all contribute to the money applied for and provided. A loan from a bank usually falls between $130,000 and $140,000, while SBA loans range between $5,000 and $5 million. However the average sits around $371,000. Know what your financial needs are before approaching a lender and have research to back up the amount you are asking for. In addition, it is crucial that you demonstrate that a loan given to you will be beneficial to the lender in some way. Show them that your business plan has the opportunity for substantial growth, development and revenue.

Materials necessary for application
Each lender may have different requirements in order to decide whether to approve your application. According to SBA, typically you will need to bring certain documents when applying.

Gather your personal credit card history, financial statements for any current businesses, financial projections for the upcoming year and a very detailed business plan that you are prepared to present. Organize all of your materials in an easily accessible folder and keep all items safe. Also, check in with your lender before your meeting to see if any additional documents are necessary.

Nexus: G-WEBCD3