Are You Prepared to Apply for a Business Loan?

Typically, small business loans are available at virtually all reputable banks, and the procedures a number of them follow seem to be based on the same template. These are the steps that are usually required in order have a company’s start-up loan approved:

small business loans
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1. Consulting with a loan officer in your area to discuss the specific financial needs of your business. This will enable the bank to determine the type of business loan that is best-suited to providing the necessary funding in your particular situation.

2. Completing the related application form and submitting all the documents required to obtain the loan you have requested. Your bank will verify their validity and look into the financial status and credit history of your business as well.

3. When this crucial verification period is ended, the loan will be approved if everything is found to be in order. To close the deal, a contract must be signed and the funds will be released at that time. Then, you can proceed to use those funds according to the terms specified in the contract, to which both parties agreed when the signing of the contract took place.

Alternative Funding Sources

To handle the cash-flow fluctuations that every company must contend with from time to time no matter how long they have been established, you should also be aware of these alternative funding sources when you need a small business loan:

1. You can have the lender attach an overdraft facility to your business account with an established limit. As a rule, if you take this step, collateral and an analysis of your business’ viability will also be required. Note that this vehicle is intended to provide you with working capital for a start-up until you begin to realize a return on your investment (ROI).

2. With a line of credit that has an approved limit, you can gain access to funds at any time, and flexibility is its main advantage. Security for such a loan is provided by mortgaging a property, and the borrower makes monthly payments which, at a minimum, are applied to fees and interest on the loan.

3. In contrast to an overdraft facility, a fully drawn advance should be used for a long-term investment, such as purchasing new equipment, which will help your business to grow. This term loan has a set program for the repayment of principal and interest, and it is secured by a business asset or a registered mortgage over commercial or residential property. In addition, this type of loan provides the borrower with stability and security when the interest rate is fixed.

Financial Profile

In every case, you must be ready to provide a complete financial profile of your business. With this in mind, see that your balance sheet is up to date and clearly indicates the condition of your company’s equity, assets and liabilities.

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About the Author: Natalie Watson is the author of this article and the Director of – A buy & sell business for sale company.