For many individuals and business owners, applying for a business loan is a daunting process. There are so many factors to consider that even just the process of preparing the application can be so convoluted. But no matter how hard or complex the process is, knowing how to get a business loan is just one of those things that you really need. But baby steps first - we need to take it from the top. Preparing the loan application comes first, and if you want it to be perfect, the application must include the following:
This is a given. It's basically just the title page, but it is still important because it makes your application look presentable. Not having a cover page leaves a bad first impression.
This is needed for the same reason you need a cover sheet, but it also has more utilitarian purpose, because it is your first means of convincing your banker to consider your unsecured business loan This shouldn't be too complicated. Just make sure it has a concise description of your business.
Table of Contents
This is just meant to make it easier for the banker to see all the contents of the application. The easier it is to peruse your application, the greater the chances of getting approved.
Amount and Use of the Loan
This is the page where you state the amount that you want to borrow, along with the purpose of the loan. You need to be detailed and truthful in this part. If, for example, you are buying a new set of office equipment, you need to include everything from the contract price and the cost of delivery or shipping, as well as the amount you're going to shoulder. Make sure everything balances out in the end. You can use a commercial loan calculator in order to make sure you're not miscalculating anything, as unsecured business loans stand less chance of being approved if the numbers don't add up, or you could end up with obscenely high business loan interest rates since being inaccurate could lead the bank to consider you too much of a risk.
This section informs the banker of your product line or service, as well as its target market. This is the place where you need to prove that your market niche is viable. Small business loans Australiacan be very difficult (if not downright impossible) to get approved if you can't prove that your product or service will succeed.
Bankers always want to see how healthy your business is, and the only way to show this is by providing balance sheets as well as loss and profit statements. If you are applying for a small business loan for a startup, it is natural to not have any financial history yet. In which case you will have to rely on financial projections
This page lists all the items that you can use as collateral, from stocks and bonds to cash reserves, inventory, and even home equity. This section will show your banker that you understand the need for a source of backup repayment.
This is the section where you add all the documents that are not listed above, but might improve the chances of your loan being approved. This could include documents that prove sale of a new piece of equipment, leases and photographs of your new business location, legal documents, or even a proof of concept for any new product you are planning to launch. The main goal is to add supporting evidence that your business will succeed and that you have the capability to repay the money you are asking for.