Raising Capital to Start a Business: Loans for Small Operators

Getting business loans to start your business can be difficult. But it all depends on how prepared you are when you meet with the bank loan officer or any lender for that matter. Lenders very seldom extend loans to startup businesses. But ironically, startup businesses are the ones that truly need money for capital. So, your success in getting this loan depends on how you present your business plan and how much money you need. Here are a few tips on how to get a startup loan.

Prepare for Start Business Loans Application

When applying for this type of loan, your persistence and strong determination can spell the difference between getting that loan and joining the countless entrepreneurs who had to abandon their businesses dreams. But being relentless will be for naught if you cannot meet the strict criteria set by lenders.

Lenders and banks want the loans they extend to borrowers to be repaid in full plus interest. So they have set up measures that will help them gauge if a borrower can pay back the loan in time. You need to measure up to these standards and answer everything they ask if you want to get a startup business loan.

Typically, when you apply for this type of loan, you will need to pass a loan request which contains the details about the amount of loan you want to borrow, your equity in the business, the business cash flow, and business plan and profitability. It is also crucial that you have an excellent credit rating.

Develop Business Relationship with Your Lender


If you want to increase your chances of getting start business loans, better build a business relationship with your banker or potential lender even before you apply for a loan. Open a business account with the bank and ask to open a file for your business where you will submit documents that will demonstrate your business performance. By the time that you will need additional funds for your startup business, your bank or lender will already know you or your business. Thus, you will have an easier time getting loan approval.

Find Lenders Specializing in Your Industry

Many startup entrepreneurs prefer not to work with banks and other financial institutions. Instead, they look for specialized lenders who are willing to lend money to businesses in a particular industry. These small specialized lenders may offer smaller loan packages compared to banks, but they sure want to do business in your industry. And because of their size, small specialized lenders have a more flexible set of criteria in giving out loans.

In the end, when applying for start business loans, make it a point to submit a well-prepared documentation of your business. Provide details about your management skills, your planned marketing strategies and credible projections of your business performance for the next two to three years.