Access to capital is critical to growing your business, whether you want a bigger space or want to expand your operations. Business loans are useful tools to achieve these goals. And if you’re considering applying for one, it’s best to prepare well before you get to the bank. Having your data organized will allow you to present a more robust application to the financial institution and will help you make an assessment of your business and even reflect on your business plan for success. These 7 steps are crucial:
Have a good purpose
Your bank needs to know that you will use the money to add value to your business. You may be applying for a loan to expand your business, cover payroll, purchase new equipment, or increase your cash flow, among other things. Make sure you are fully aware of your business needs and the purpose for which you will be using the money you are borrowing.
Go to the right entity.
Approach institutions that have good credentials and that have granted loans to businesses similar to yours in your industry and geographic area. These entities already have a good part of the information they will need to make a decision about your case.
Apply for the loan that best suits your business.
Make sure your payment terms are in line with your business’s cash flow. Be prepared to offer collateral that ties into the purpose of the financing. Another good option: ask about a loan guaranteed by the Small Business Administration (SBA).
Collect the necessary documentation.
Make sure your payroll, property, and tax returns are up to date. As part of the application process, you will need to include:
- Income tax returns for the last two (2) years
- The financial statements for the last two (2) years. Must include an Interim Statement of the current year, as well as the Statement of Position and Income and Expenses
- The accounts receivable and accounts payable report
- Projections of income and expenses for the next two (2) years of operations
- Copies of contracts from your most important clients
- Patents and any other proprietary information
Review your business plan
This plays a crucial role and should include:
- Business Description
- Marketing strategies
- Competitive analysis
- Development plans
- Operations
- Administrative plan
- Key Employees
- Financial information
After evaluating these tips and if you are ready to request capital for your business, learn about the options that Popular offers and request online.
This article is for informational purposes only and does not constitute an endorsement or guarantee of the accuracy or applicability of its content for any particular purpose. Neither Popular nor any of its affiliates, subsidiaries or related companies are or will be liable for any special, direct or indirect damages resulting from the information contained in this article. If you require any advice, you should request it from the competent professional of your choice.
