Monday, April 11, 2011

Small Business Loans Are The Key To Success If You Plan Ahead

By Kate Mayers

Before you even think about applying for small business loans, outline your plans and how you plan to make use of the funds. Companies with few employees fail every day, but those with sound tactics tend to succeed more often than not.

Look at your original business plan and look at where you are today. Is more money the answer, or could you really just need a way to better manage your plans. If you can do more with less, there will be no additional money to pay back and you will be even more profitable in the long run.

Determine what future risks might might need to be addressed. For example, if your product relies on oil, the costs might skyrocket. If your building is old, think about whether it needs to be renovated or expanded to improve sales. Above all, try to plan ahead so you are not scrambling at the last minute to find a lender. If you are forced to get a loan quickly, you may be forced to take one with repayment terms that are not to your liking.

Every product or service involves taking a risk. Money is being invested with no guarantee and you are hoping that the economy will hold. If your product is high-risk, it will more difficult to obtain additional funding. When applying for a loan, get all of your ducks in a row. Then, even if the creditor is concerned, they will feel much more comfortable as you outline your plans that cover many possibilities.

When asking for a loan, the creditor will need to know what plans you have for its use. Lending institutions tend to be hesitant to give loans if there is no real need. Outline plans for expansion, for developing new products or for whatever it is that you do best. Prove to them that you know how to make the money work and that you will realize a profit.

Stable products that have a good track record are much more appealing to potential lenders than dicey items. Creditors who extend loans are, in effect, investing in your company and taking a chance on you and your plans. The more you can prove your ideas are viable, the more likely you will get a loan and at a better interest rate.

Management teams make or break a company with their experience and with the procedures they follow to attain corporate goals. Outline the pertinent experience, skills and successes that they have. A good team can ensure success, which means you will be a good bet for a loan.

Business plans are the foundation a company is built on and can show the lender that you know what you are talking about. Show where the company started and where you plan to take it in the future. A solid strategy shows that you have a thorough knowledge of what you need to do and how you will be doing it.

Although small business loans need to be repaid, along with interest, they may provide the boost you need to move to the next level. Always present a professional appearance and a positive attitude. Success breeds success, and is more likely to inspire others to believe in your plans.

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