Welcome to another Lendio Whiteboard! This week, Burke Alder tells you everything you need to know before you go to a lender.
When you’re getting ready to apply for a small business loan, you’re going to want to have some things ready. Lenders will look for these things, and being prepared will increase your chances of getting that loan.
Welcome to Lendio Whiteboard. This whiteboard series is dedicated to the ins and outs of making small business loan simple.
This week we’re talking about how you can best be prepared to talk to a lender about getting a small business loan. There are five things you can accomplish before you talk to a lender that really will help you stand out and get that capital that you need.
Let’s start with number one, what you need the money for? Is it working capital? Is it to purchase equipment? Expansion or may be hiring someone? Inventory? It should be very clear to you why you need that money as you grow in your business. Lenders want to know that you know.
Number two, how much will you need? If I have one of these purposes over here (working capital, purchase equipment, expansion/hiring or inventory). I need to know that amount of money I need to accomplish that goal. Let’s say $50,000.
The third thing, as you come prepared and talk to lenders, you’re going to want to know your credit. You want to have it validated. So we’re going to have that check mark there. Now we’ve talked about three of the things you’re going to need to do to best prepare to talk to a lender. Let’s get to number four. This is pretty simple. These are the documents you need: Two years tax returns, personal and business. Profit and loss statements. Balance sheet for your business. Your business license. Articles of incorporation. All of these documents will help you really look good as you talk to a lender.
Let’s talk about the last part. You don’t want to go to a lender and say, ‘Hey, I want $5 million.’ Once again, we have our goal of how much we need. There’s a good rule of ‘rule of thumb’ here. If your revenue is around two hundred thousand, you probably could be looking to about ten percent of that revenue, so twenty thousand for a business loan. But there’s another way you can get even more and that’s using collateral.
We’ve talked about this on our last whiteboard, and you can actually click the link here in this video to go see the collateral types you could use to get more than that ten percent of your revenue. Thank you for stopping by for this week’s whiteboard. We’ll see you next week.
Other videos in this series: