How to prepare for and maintain a small business loan

2/16/2012

The recently released January Biz2Credit Small Business Lending Index found small business financing requests by small banks and non-bank lenders has increased to their highest levels in the past 12 months.

Because of this, commercial loan rates are at attractive levels, and now may be an excellent time to consider taking out a small business loan.

First, the company must determine if it can handle taking on business debt. If a business plan over the next month, six months and five years suggests that debt can be allocated, then the next step is determining an acceptable loan range.

A short-term loan would be necessary for a line a credit, and longer-term loans are more typical if one is taking out a mortgage, for example.

Next, contact a loan officer to evaluate current finances. Provide a Profit & Loss statement as well as account balances and at least three years or prior statements or tax returns.

When discussing the need for a loan with an officer, a legitimate purpose and business plan must be outlined. A loan may be granted if the lender determines the company can pay the loan back.

Finally, maintain the loan. Conduct annual updates of financial statements and be sure to contact a loan officer if a longer-term loan commitment is needed.