Business Loans

Most of us have at some point in our lives considered being masters of our own destiny as far as our earning capacity is concerned. Owning your own business can be a very rewarding experience, however the majority of us never actually take the plunge mainly because of lack of finance. In most businesses, finance of sorts is required, simply because you have to produce your products or services first before someone is prepared to pay you for them.

In producing those products or services you have to spend money which may not be readily available in your business and that is why you have banks, investors, moneylenders etc. Even as you expand, further finance may be necessary to support any activity that may increase before you make the sales and get paid. Your business can go bust if it does not have the appropriate finance arrangements in place to deal with expenses that need to be paid before your customers pay you, even if your business is profitable. You need to try to match the appropriate source of finance for what you are trying to achieve.

In general – long term finance for long-term investment and short-term finance for short-term working capital requirements. It is really important that you apply for the correct finance type for your business. Get The Right Business Loan Approved For Your BusinessBanks are the major source of finance for small business owners throughout the world. When applying for finance from your bank it helps if you follow these procedures:

Always produce a complete business plan. If your business plan is compiled for you by your accountant or a third party, make sure that you can explain the business plan without the person who prepared it is present. Remember, the bank want to lend you the money, NOT the person who prepared your business plan and cash flow projections.

Always prepare a clear, succinct 2-page summary of the business plan. This allows your potential lender a quick insight into your business and quickly give you an indication whether he/she is interested in going further with you.

In your business plan always ask for a 25% longer repayment period than you need and between 30-40% more money than you need. It gives you room for tweaking your business should your business not go according to plan and believe me, this happens to many businesses no matter how superb their initial plans are.

Send your business plan to banks with an invitation for them to visit your premises. Make sure that you prepare your staff before the bank manager comes to your premises.

Think of the questions that are likely to concern him and have your answers prepared. Always negotiate the interest rate and terms after the offer has been made, not before. Try, by all means, to avoid personal guarantees but if you have to give them ensure they are limited to the amount of the loan. Do not agree to too much security only agree to the banks maximum exposure to loss.

Author: James Chiweshe
Article Source: EzineArticles.com
Provided by: Pressure cooker

When your little idea, your dream starts taking a real shape you know it is time you garnered your finances to make it grow. At times your effort fall short and there you are filing for loans. Commercial loans can help business interests with uninterrupted capital supply.

Commercial loans can be used to buy business premises or commercial building for both new or establish businesses. They can be used to buy any business asset or to finance the expansion of any established business.

Different commercial loans lender have different way of processing commercial loans. You can start with pre-qualifying for commercial loans. This determines how much as a borrower you can afford as commercial loans and which commercial loans programme will suit the best.

Commercial loans are the biggest way of financing business projects. While providing you with commercial loans, the loan lender will look at general information as your income and existing debts. Your application will be reviewed by a loan officer.

Commercial loans lender will take keen interest in

Credit history

Reason for loan

Collateral

Ability to repay

Your investment in the business

Documents to gather while applying for commercial loans are

Loan request the amount of loan requested, how the funds will be used, loan type and amount of working capital on hand. Commercial loans lender will feel more secure knowing that you have invested your own money in the commercial plan.

Business plan – If the commercial loans are used for starting a new business, the business plan is crucial. It should include cash flow projections for first 24 months. Information should be concise and clear. Its feasibility will be fundamental in getting commercial loans approved.

Personal financial statements – In case commercial loan is used for expansion of business, it will be required for you to give business profile. Personal financial statements would be required for anyone who owns 20% or more of business. Complete information about current debts balances, payment schedules, maturity, and collateral used to secure other loans. You can be required to provide more documents during the loan process.

In case you are purchasing real estate, you might be required to submit preliminary environmental reports, area maps, title reports, property appraisals, and lease summaries.

Decisions for commercial loans take usually 1-5 days. During this time, you might be required to give further information. Commercial loans broker can help you submit your loan application to several lenders for approval. Your job is to select the most attractive offer and returning the final letter of intent. After all the conditions are satisfied, the commercial loans are approved and the lender will give a final loan commitment. At the closing, the commercial loan will be transferred with a cashiers check, draft, or electronic wire transfer.

Commercial loans are either secured or unsecured – with or without collateral. Secured commercial loans are more commonly available as commercial mortgages. Commercial mortgage are provided at better terms, interest rates and repayment options. Commercial loans are available with fixed and variable rate options. Fixed rate commercial loans will mean that your interest rate and monthly payments will be fixed at the beginning of the loan and will remain so throughout.

Businessmen apply for fixed rate commercial loans for it helps in effective financial planning because they know how much they are giving out every month. With variable rate the interest rates changes in accordance to the changes in the market. The benefit with variable rate is that they start with lower interest rate than fixed rate. But interest rate can increase during the term and therefore you will have to pay more. On the contrary fixed rate commercial loans will leave no space for change in case the interest rates drop.

Investigate before you make a commercial loan claim. Be prepared to answer some questions. Commercial loans are cost effective way of funding business needs when you need it. Commercial loans can strengthen your competitive position; increase your working capital and maximum profitability. Investigate your opportunities with commercial loans and see how your business becomes a commercial success.

Author: Natasha Anderson
Article Source: EzineArticles.com
Provided by: Smart cooker