How to Apply For - And Get - Small Business Financing

If you start a small business, there's going to come a time when you need extra money. Maybe you'll need it to get your business up and running, or you might need it to expand and grow, but you know you'll have to take out a small business loan in order to make your plans happen. As you are probably already aware, some people who take out small business loans are successful in getting them, and others get restored time and again. So how do you go about presenting yourself and your plans in order to get lenders interested in financing your project?

The main difference between those who succeed and those who fail is planning. The more prepared you are when you present your ideas to a lender, the more likely you're going to receive the funds you need. Think about how differently these two scenarios will end up:

John barges into a bank demanding to talk to a loan officer. His jeans and t-shirt are disheveled, and he has a 2-day beard. The loan officer is cordial, even when John throws in a bit of colorful language now and then. When he's asked about his business plans, he very vaguely describes an idea he had. He has no cost estimates and no conception of how the money he's asking for will be sent. He's equally vague when the officer asks him about his personal finances. When the lender does a credit check on him following the meeting, he finds that John took bankruptcy within the last year and has a history of unpaid bills.

Joe, on the other hand, calls ahead to make an appointment with a banker. He arrives a little early wearing a neat suit and tie and speaks politely to the receptionist. He's brought a concise, well-thought-out business plan with him as well as a break-down of where the money he's borrowing will be spent. In addition, he's able to provide the loan officer with a personal financial history that shows an excellent track record of paying his bills in a timely manner and a great credit rating score.

In reading through the above scenarios, it probably seems ridiculous to you that anyone would approach borrowing money the way John did, but you might be surprised. Bank loan officers have seen and heard it all. So think about it. When you go in to present your business ideas to the banker and ask for funding, are you going to act like John or like Joe?