SBA loan hinges on business plan.: An article from: Arkansas Business

Product Description
This digital document is an article from Arkansas Business, published by Journal Publishing, Inc. on April 12, 2004. The length of the article is 1189 words. The page length shown above is based on a typical 300-word page. The article is delivered in HTML format and is available in your Amazon.com Digital Locker immediately after purchase. You can view it with any web browser.

Citation Details
Title: SBA loan hinges on business plan.(Entrepreneurs)
Author: Bill Bowden
Publication: Arkansas Business (Magazine/Journal)
Date: April 12, 2004
Publisher: Journal Publishing, Inc.
Volume: 21 Issue: 15 Page: 30(2)

Distributed by Thomson Gale

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How to Qualify for a Business Loan

Qualifying for a business loan is not as easy as it was even one year ago. This is because most lending institutions have increased the requirements for businesses requesting a loan. The recent slowdown in our economy has forced banks to re-examine their lending practices as many businesses are experiencing lower profits. So when you are looking for a loan for your business it is important that you have everything in order so you will have the best chance to be approved.

One of the first things that you need to look at before going to a lending institution is whether or not you have a good business plan together. Having a business plan drawn up for your company is a great way to show the bank that you have carefully considered your request. This will show the bank where your business is currently and where you hope it will go once you have been approved for a loan. There are many professional writers that work as freelancers that have the expertise in this area that you can hire if you are uncertain about your ability to convey your thoughts on paper.

The next thing to do before you go to a lender is to look at your company’s financials. Clear as many debts as you possibly can. For example, if you use a credit card start paying it off monthly or if you have a vehicle loan with just a few payments left on it you might want to consider paying it off. This will help your income to debt ratio and make your business a more attractive prospect.

Once you have done that, you should look at all the officer’s credit reports. Every officer of the company will have a credit history run on them because they will be personally guaranteeing the loan. So make sure that the person income to debt ratio is good and clean up any bad marks against your credit.

When you have all of that together you are now ready to go to the lending institution. With the situation the way it is currently it would be wise to start with the bank you already have a relationship with. This is especially true if you have a community or local bank. They make their decisions based on the local area unlike the larger national banks. If your company is turned down don’t take it personally but consider your other options.

There are other places to gain access to a loan. You need to keep your eyes open, when the private market tightens the amount of money they are willing to lend oftentimes you can more easily qualify for an SBA loan. So if your bank says no don’t give up to easily especially if all of your financials are strong. So when you are looking for a business loan make sure that you have your company looking the best that it can financially and present the lenders with a solid business plan.

How to get a Small Business Administration Loan (SBA)

As a new entrepreneur looking for capital, one of your first options for a loan will be the SBA, or to be exact, asking for an SBA-backed loan. SBA loan applications are made through a bank. The SBA guarantees a loan to the bank, so in case the borrower defaults, the bank is guaranteed a portion of the loan by the SBA. (You are still liable for the loan, so your obligation does not go away) This makes it easier for banks to lend to budding entrepreneurs, but it does not mean that the bank can lend indiscriminately. The bank will analyze the application to protect its interest as well as the SBA’s.

The SBA does not lend directly to the business owner. It is important that the bank you are working with is knowledgeable about SBA loans, as it will initially process your application, not the SBA. The SBA will review the application once the bank approves it.

What will the bank look for in your application?

· Good Credit Score. This is a very important factor in the consideration for a loan, but not the only one. If your score is not good right now, work on improving it. Although good credit is a key factor for getting a loan, is not the only factor. If you don’t have perfect credit, you can mitigate it by providing a thorough business plan, collateral, a higher co-investment in the project, a cosigner, etc. You will have to explain any outstanding issues with your credit. Moreover, lenders have different appetite for risk (large commercial banks are usually more conservative), so you may be able to find a lender that will work with you.

· Collateral (security for loan). In some cases a good credit score and down payment are enough to secure a loan. However depending on the amount of the loan, you may also have to offer collateral. You can use your house, stocks, or any other major possession as collateral if the bank requires security in the event you cannot pay back the loan.

· Experience. The relevant experience of the business owner is an important factor for the loan package. Banks feel more confident in giving out a loan to business owners who have relevant experience in the business that they are starting, such as a dentist opening a private practice.

· Owner’s Investment. If you are forming a new business, be prepared to invest a certain portion of the start-up costs personally. Lenders rarely finance 100% of the business. They will expect you to raise 20 to 40% of the investment yourself. The higher your personal investment in the business, the better the loan application looks to the lender.

· Good Business Concept or Plan. A good business concept that is believable and relatively conservative. Lenders are conservative organizations that do not like to take large risks.

· Capacity to Manage and Pay. The business should be able to generate enough cash to pay back the loan installments.

· Guarantees. The lender will look at how the loan can be secured. He or she will give importance to the individual’s personal financial statement and see if the loan can be secured against personal or business assets.

When applying for a loan and writing a business plan, make sure your financial projections are correct. Do your research. Know your business. It is surprising to see the number of entrepreneurs who do not pay enough attention to the financial aspect of the business. Paying close attention to the financial details will determine whether your business will survive.

Although most banks want to help entrepreneurs fund and expand their businesses, their primary responsibility is to make money from the loans and minimize their risk. Just because you have a great idea and are motivated to see it through, you may not get a loan. In fact, banks are very careful with innovation; they are conservative institutions that tend to lend to “tried-and-true” businesses. Whenever you submit your business proposal, always ask yourself, “What would make this a good deal for the bank? What assurances (aside from my good credit and great idea) can I give to the bank so it will get its money back plus interest?”

How Boomer Women Business Owners Do Well And Do Good

Baby Boomer women have a lifetime of experience, skills, self-knowledge, and wisdom that make them well qualified to start and grow a business of their own. Now in their 50s and 60s, this generation is ready to take charge of their lives in new ways.

Free of the time demands associated with raising children and confident enough to find work that inspires them, these women are turning their hobbies, passions, or professional expertise into businesses of their own.

But this will not be “business as usual.” In a fast-changing and turbulent world, Baby Boomer women are ready to create greater meaning in their own lives and in the lives of others through their entrepreneurial initiatives. Many are committed to doing “well” by building a successful business, while doing “good” in the world at the same time. Success to many Baby Boomer women involves working in a business they are passionate about, not just one that can pay the bills or provide luxury items.

While the majority of entrepreneurs may start their businesses with big financial goals, there are more important aspects involved in a Baby Boomer business plan. Here are Five Cs that can be used to clearly define the priorities of many Baby Boomers in how they will build and operate their own businesses:

* They have Concern for the world in which we live, and their business will reflect that concern.
* They make Connections with others, and have a need for socializing and networking.
* They build Community.
* They express themselves Creatively, and are not afraid to think outside the box or take actions that are a bit outside the ordinary.
* They value Character in making decisions.

Although serious about earning a living and generating a profit, Baby Boomer women see transitioning into self-employment while still maintaining their current career, or after their retirement, as a way to give back to society and to make a difference. At this stage of life, they strive to live their values and use their strengths to create a business that reflects their authentic selves.

No longer is it contradictory for businesses to do well and do good. Watch for a growing number of Baby Boomer women-owned businesses that change the nature of our business community by leading the way with businesses that:

* Strengthen our economy
* Enrich our communities with meaning
* Address society’s social problems and work to provide solutions
* Model a new way to live life after 50 that doesn’t necessarily include long hours in the rocking chair on the front porch

For companies that want to serve the ever increasing market of women baby boomer business owners, it’s important that their motivations at this mid-life stage of their lives are understood. Although this is a diverse group, be mindful of the general tendency at mid-life to have a strong desire to give something back, participate in activities and events that are meaningful and to create a legacy. Speak the language of this market to gain their attention and understand their passions.

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