3 important facts of getting a first time business loan

The entrepreneur might, however,  have a great idea for a new business that would, however, be a huge success, but getting a first-time business loan is also no small feat. The start-up costs of a business are however considered as a huge obstacle for the entrepreneurs with a little amount of cash. The borrower must however be prepared to demonstrate to a lender that the borrower is a credit worthy and he must also be prepared to run a successful business. There are also a few more things that the borrower should know about getting these loans.

1- Your Personal Credit History

If this is the borrower’s first business, then he, however, doesn’t have any kind oof established business credit. So the  lenders are however  going to base the  credit worthiness on the borrower’s  personal credit history. If his score is great and he  pays  on time every time, then he is one step ahead. If not, then he is required to make some of the  improvements before he  applies  for a loan. If his credit history is minimal, he may however  want to establish some of  new credit. Borrower must however try  obtaining a new credit card or even a secured card. After six months the borrower would however  have raised his  score and also shown an  additional payment history.

If he  already has an established credit, but his  score is low, he  needs  to find out why. Perhaps his balances are too high. He should however  not carry a balance over thirty percent of the  limit. He however  never wants  to go over his limit either. Paying down these cards would however  dramatically increase his  score. If he  has  late payments then perhaps he would however  benefit from the  automated drafts.

2- Know your Field

The borrower however  shouldn’t try to start a business in a field he  knows  nothing about. A lender would however  not extend a loan to him  since it would thus be risky. He needs  to be passionate about his venture and also be an expert on the topic. He must however Take classes in order to strengthen his skills. He must Get a partner who is thus knowledgeable in the field. He must however Show a lender that he knows what he is talking about.

3- The Business Plan

The most important step in applying for a small business loan is however  creating a good business plan. A business plan must thus  be well thought out and also  well presented. His plan should however convince a lender that he is at  a low risk. He is also required to research how feasible his  business can be. The borrower’s business plan must thus  explain how much money he would thus  will need, how will he spend the money and how would he  plan to repay. Also, he is required  to provide his  business financial statements and the  corporate documents, if they are applicable. The main thing is thus  to convey the mission statement properly and then  provide the lender with the supporting documentation to see that he is  committed to the business.

By | 2018-01-18T13:25:10+00:00 November 3rd, 2017|Business Loan|0 Comments

About the Author:

Pulkit Jain is the founder of LegalRaasta – India's top portal for registration, trademark, return filing and loans. Pulkit is a veteran CA with over 10+ of experience.

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