One of the largest stumbling blocks you will encounter when starting a new business or upgrading your company is getting a bank loan. A lot of people have no idea how to start to apply for a loan. The quickest way to get turned down for a loan is to go into the bank with no documentation. A banker needs to have documentation for the dollar amount that you are requesting. They will also want a detailed report of why you feel that you need that amount.



The banker will also request for a projection of when the loan can realistically be paid back. They will want to know how often you will make payments. Should you decide on monthly payments, the bank will then want to know the amount of that payment. If the loan is of considerable amount, the banker will need to know what you plan to use as collateral. A company's assets are normally used as collateral. Real estate, however, is the biggest asset used as collateral.

A financial history for your company will need to be submitted. This includes balance sheets, profit and loss statements. If your company is already established you will need to have up to three years worth of these documents. Should you just be starting this business, a very detailed business plan needs to be provided to the bank.

Projected profits and projected cost flow for the next year will need to be done on a month to month basis. All projected money coming into the company should be detailed out for the banker. All expenditures, from supplies to salaries, also need to be in a detailed form.

The banker will want a detailed report of where you envision your business each year for the next three to five years. Included with this should be all expansion ideas for employees, locations, products, etc. The bank will need to know the plans for the company's future and the direction that you want the company to head in the future.

Other information the bank will want to know will be the business experience that you have or have had. You need to tell them about any degrees or certificates you have. They will also want to know how long you have worked in the industry.

If you don't get your loan, let the lenders know that their rejection doesn't discourage you. You should portray confidence and determination. You need to try several lenders until you receive the money you need. Be confident and proud of your venture into the business world. You should let the lenders know that you are in control and you know what is best for you and your business. Ask the bankers why you did not get the loan. Take that answer, learn from it and then move on and try other lenders.

As a business owner, the most difficult task is finding the money to operate your business. Take the necessary steps to minimize difficulties when preparing for a business loan. The most important task when getting ready to apply for a loan is to prepare a very detailed business plan.

Copyright ? Jim Sperlich