Get a Business Loan with the Least Money Down

If you want to get a business loan that requires the smallest amount of down payment, you need to back your loan with some form of security or assurance that you have the capacity to pay back the loan. By doing so, you take the risk away from the bank or lender. If you give them the documentation they need, they do not have to ask for very high money down. Once you have selected the right loan package, here are a few steps you can follow to ensure that you do not have to shell out a huge amount of money as a down payment.

Things Needed for Low-Money-Down Business Loans

  • Business plan
  • Business profile
  • Personal equity in the business
  • Improved working capital

Step 1 – Invest in Your own Business

Banks like to see that entrepreneurs have invested their own money in their businesses. To get business loan, you must have your own equity or stake in the business. You cannot expect a bank to easily approve your loan if you have not invested a considerable amount of your own money in your venture. Investing a significant amount of your own money will also significantly lower the amount of money down for your loans. Show the banks that you, like them, have something to lose in case your business fails. Typically, banks would like to see that at least 20% of your total business capital structure comes from your own pocket.

Step 2 – Furnish the Lender with Your Business Plan

A business plan is a standard requirement when applying for loans. Provide the bank or the lender with all the information that they need to decide whether to grant you loan or not. Explain the nature of your business and provide reliable projections of your business performance. Your lender would like to know how you plan to repay the money in case the loan is extended to you.

Step 3 – Provide Lender with Accurate Business Profile

Apart from your business plan, which outlines how you do business, your lender will need your detailed and accurate business profile. This will provide them with information about your business background. Include your average sales in a month or year, the time that you have been in business, and even the number of workers you employ.
 
Step 4 – Improve Working Capital in your Business

Your working capital works very much like your personal credit score. Your working capital can determine the level of risks that a bank or lender will have to face should they grant you loan. Working capital is arrived at when you deduct current liabilities from your current assets. Essentially, this figure confirms your liquidity, which in turn impacts your ability to pay your debts. The better your liquidity, the greater the chance that you will get business loan at very low money down.