Drug testing

The Deal is in the Details

What Startups Need to Get a Business Loan, Part 2

In part 1 of this article, entitled "Three C's", we looked at the overview of startup business loan requirements from the lender's perspective. We read how cash, good credit and sufficient collateral form a joint partnership to enable a loan request to bond together into a doable deal. Part 2 will convey the borrower's documentation necessities in a more detailed fashion. Bear in mind that the following points are of a "generally complete scope", and that different types of lenders may have additional, similar, or unique conditions to adhere to.

All would-be borrowers of startup business capital need to begin to create and/or gather the following information:

Business Plan - This is not the same as a full scope "business plan" that you would have professionally prepared to approach a venture capital firm. What your plan needs to document is the type of business, ownership information, legal entity (i.e., sole proprietorship, partnership, corporation, etc.), the origination date of the company, the type of product or service offered, and any organizational or management information that the lender should know about, such as:

How many employees will you have, if any, and what their function will be

How you intend to get business

What your selling terms are (e.g., 2% 10 days, net 30)

What facilities are utilized, etc.

Use of proceeds - Disclose the loan amount and how the funds will be used (percentage of working capital, of new equipment, of paying off other debts, etc.).

Projections - This is a major area. If you can get letters from two or three trades that say they are ready to give you projects once you are funded, it would help tremendously. Also, include income and expense projections for the next three years prepared by you or by an accountant. Generally, lenders will want to see cash flow such that your net income from the business will be at least 1.5 times that of the debt service.

Personal Financial Statement - Make sure to list all of your assets and all of your liabilities. List any personal debt owed to banks, finance companies, etc.

Personal Tax Returns - Provide copies of the last three years personal tax returns. Make sure to include all pages.

Personal Resume - You can create this yourself; there's no need to hire a professional to do this. However, do your very best to make it look professional.

Articles of Incorporation - If the business entity is a corporation, provide a copy of the Articles of Incorporation and the borrowing resolution of the company.

Partnership Agreement - If the business entity is a partnership, provide a copy of the Partnership Agreement.

Business References - Provide three letters of reference, one being from another bank or lender. Ask for testimonials. Do not just list names and phone numbers.

Listing of Fixed Assets - List all your fixed assets with their approximate fair market value and their make, model and serial numbers. List their liquidation value as well.

Equipment - If any of the proceeds are for new equipment, provide invoices or equipment description(s). List any equipment for the business in your possession, it's age, a copy of title, the original dealer invoice, and the amount of hours on the equipment.

Bank Statements - Include bank statement(s) to verify the amount of cash you have to put down on the loan.

Credit Report - If you have ordered and received your personal credit report, include it as well.

Professional Assistance - List the contact information of your banker, your accountant, your attorney, and your loan broker.

With all of this information compiled, you're well on your way to having a nice package to present to a lender. A very wise move would be to contact a professional loan broker to assist you in putting the documentation together into a format that commercial lenders and banks want to see. Brokers are also able to submit your loan request to a few different lenders to provide you with the best possible rates and terms. He or she will also strengthen the request by making certain that all of the appropriate paperwork is gathered and put into it's proper order.

Though this procedure may seem daunting, and the documents take a good amount of time to create, there is an additional benefit that is not readily apparent to most borrowers. If, for one reason or another your loan is not approved with the initial attempt, it only takes a few forms prepared by your broker to convert your request into an SBA loan. At that point, you may have a much better chance of funding. Since it's beyond the scope of this article to discuss SBA loans, contact a loan brokering professional for more detailed information.

Mark Uptain is the owner of Regent Business Capital, a loan and lease brokerage that works with lenders nationwide to help small and medium-sized businesses get financing. His website The Equipment Leasing Source, offers free equipment leasing information and competitive quotes to businesses throughout the United States.

limousine chicago service
In The News:

Can a Microbusiness Help You Enjoy a Better Retirement?

Not having enough money for a comfortable retirement tops the... Read More

Creativity & Entrepreneurship: The Creative Evolution of an Intellectual Property?

In each of us, there is a creative spark -... Read More

Interview with Best-selling Entrepreneurial Authors Barbara Winters and Nick Williams

Ray Bradbury's quote, "You've got to jump off cliffs all... Read More

Franchises-Exit Strategy

At an International Franchising Symposium in London, Peter Holt made... Read More

Ten Traits of Successful Entrepreneurs

Successful entrepreneurs have many traits in common. Here are ten... Read More

How to Become a Successful Entrepreneur on the Web

Becoming a successful entrepreneur in the online world is no... Read More

Six Steps to Guarantee Your Business Success

Many of us slave away for years for one uninspiring... Read More

The Fear Factor

I recently conducted a lil' survey asking my colleagues what... Read More

For Business SUCCESS... Listen To The Voices of Experience

Discover the pitfalls of owning your own business BEFORE... [you... Read More

Starting Your Business By The Book

I've gotten several questions recently about the legalities of starting... Read More

A Startup Never Closes

When it comes to a startup, the luxuries shared with... Read More

Raising Capital for Your Business ? How Long Does it Take?

Most companies vastly underestimate the time commitment necessary to successfully... Read More

Starting a Company on a Shoe-String Budget

A lot of people never start businesses because they believe... Read More

Entrepreneurship Story; Over Regulation in Franchising Part I

Jim and Sally run a successful auto business, which they... Read More

Why Most CEOs & Entrepreneurs Fail?

Times are tough. The economy is in a constant state... Read More

Oil Change Guys History; Part III

Studying the history of franchise companies is interesting is watching... Read More

3 Essential Elements of Operating a Successful Business

Have you ever imagined what it would be like to... Read More

An Entrepreneur Is

An entrepreneur is an innovator. She sees a need in... Read More

How Home-Based Business Entrepreneurs Think

Too many people are trying to start their home businesses... Read More

The Dirty Dozen

1) No Umbrella Business Plan or Strategy -- Without a... Read More

Do You Have What It Takes To Be An Entrepreneur?

Q: I am interested in starting my own business. I... Read More

Ex-Yankee Pitcher Pitches Barter As Powerful Business Tool

Mission Viejo, CA - June 14, 2005 - Bob Meyer,... Read More

Is Now the Right Time to Become An Entrepreneur?

A number of economic changes are magnifying the role of... Read More

The Use of Common Stock in Venture Capital Transactions

When raising capital for a business venture, a company can... Read More

Identify the Growth Factors

In "The Incredible Hulk", mild-mannered scientist Bruce Banner discovered that... Read More

roadway cobra head led light manufacturers Pete's produce ..