Are you visiting the SCORE site looking for help finding a small business loan? Loans for small businesses have never been easy to get, and today, it’s even tougher. However, whether you’re looking to start or grow your business, there are some steps you can take to improve your odds of getting that loan. One key step that many business owners ignore is to assess the specific type of financing they need.
Don’t visit a lender until you can answer these 7 questions:
- Do you want the money to start a business, or expand? In general, getting startup capital is more difficult, but it can be done.
- Is a loan really your only resource, or are there other ways you could finance your startup or expansion? Startups should consider bootstrapping, tapping into personal savings or assets, and approaching friends and family for loans or investments. Existing businesses should closely monitor cash flow—perhaps you don't really need a loan; you just need to accelerate your receivables.
- What will you use the loan proceeds for? A lender will need a detailed plan for how you will use the money and how the funds will benefit your business.
- Will this money help accomplish the goals in your business plan? If you don’t have a current business plan, write one now. Lenders won’t even consider your application without one.
- When will you need the money? It’s sad but true that many times, you can get a loan more easily when you don’t really need the money. Try to forecast when you may need capital so you can work on getting it before it’s an urgent need.
- How experienced is your management team? Lenders will want to know you're your key players have experience in what you’re trying to accomplish, whether that’s launching a business or taking it to the next level.
- Are you in a risky business? If your industry is hurting or experiencing high failure or delinquency rates, bankers will be more critical of your loan application. Conversely, if your industry is doing better than average, you’re more likely to get a loan.
Of course, the experts at SCORE can help you make sure you’ve asked all the right questions—and are ready to answer any curves the bankers throw at you. Visit the SCORE website to get matched with a SCORE Mentor for advice and counseling 24/7.