In order for a business to keep operating, or get it off the ground, it must have financing which can often be in the form of a business loan. It is not difficult to apply for commercial loans from banks and other financial institutions. Business owners looking for start-up loans can apply for business loans in Toronto from lending institutions. If you are looking to apply for a business loan, whether to fund an ongoing business or inject capital for a start-up business, there are certain steps you need to follow through the loan application. This is what you have to do:
Reason and amount of the business loan
Most ongoing businesses have a clear reason for and the amount of the business loan they need. However, this is not the case for a start-up business. Start-up business owners may only be in the process of determining how much money they need and for what. Before applying for a loan, any business looking for funding, whether a start-up or existing, should take some time and be able to articulate how much they need and why they need a business loan. It is hard to know how much you need for a business loan unless you prepare your financial statements. This should be done as part of your business plan.
Review your credit score and credit history
If you are looking for a start-up loan or your business is less than 4 years old, the lending institutions will evaluate your personal credit as well as your business credit history. You need to take some time to review your personal credit history first or that of your business. You can easily get credit reports from major credit reporting agencies. If you find any errors in your credit report, you need to write back to the agency and ask for a detailed report on the errors and how to fix them.
There are some errors that the agency cannot fix and if you find yourself in such a position, you need to file a credit dispute report. Make sure you also check on your credit score. A good credit score significantly increases your chances of being approved for a loan. However, if you do not have a good credit score, you can still apply for a business loan. You need to find a lender who is willing to offer a business loan despite your bad credit score.
Start reviewing your borrowing options
It is advisable to look at all the reputable lending institutions in your area. Do not just go to large commercial banks; consider even the private lending institutions. Visit every one of these lending institutions and talk to them about your loan application and see what each institution has to say. This will help you pick out a lending institution that is flexible to your terms.
Prepare your business plan
Before you get a business loan, you are required to prepare a good business plan. Unless you have a good business plan, you may not know exactly how much funding you need or how fast you can repay the loan. All institutions ask for a business plan as one of the loan application requirements. To prepare a good business plan, you need to include several years of past and present financial statement for your business.
Start-up business owners have to present their personal financial statement dating back to several years. The statement will include the type and value of assets you have to use as collateral to secure the loan. You are also required to provide a statement of your experience as well as an analysis of the market your business will serve.
Plan a presentation and make the appointment
In order for a loan officer to approve your loan application, you have to ensure it is compelling. Prepare an application and a presentation of your business plan for your loan officer. Make sure that you hand over a professional package that includes spreadsheets, financial statements and charts if necessary.
Include an executive summary. the executive summary is very important since that is what loan officers go through first before they can decide whether they are interested in your project or not. Make an appointment with your loan officer and request for enough time to allow you to make a short presentation. You can use visual aids depending on your business plan. Ensure that you are well prepared and be organized, succinct and concise.
If this is your first time to apply for a loan, it’s wise to look for a company that can help you acquire business funding in Toronto. Before applying for business loans in Canada, there is a lot of research that has to be carried out first and this can be overwhelming for a start-up business owner. Look for a company that has already done the research and knows all about the business loan market as well as the start-up funding market. They will help you to find the most appropriate source of funds quickly for your business.