Business Loans

Whether you are a start up or an existing business, there are excellent opportunities to acquire a
Commercial Loan, Federal SBA Loan, Venture Capital or Private Business Loans.  The best way to
get your business started is with business loans.

Business loans can provide capital for inventory, equipment, machinery, real estate, vehicles,
research and development etc.  All you have to do is go online. There are so many lenders and loan
referrals agencies who will be glad to work with you to get you approved for business loans. Your
business will be up and running in no time with the help of business loans.

Reasons to take out a business loan:
The most common - and generally the easiest - reason to get a business loan is for expanding your
business, either by opening new locations, entering new territories, or otherwise increasing the scope of
your current operations. Lenders see that your business is succeeding and are willing to loan you
money to do "more of the same."

While expansion is probably the most common reason for applying for a business loan, here are a few
other ways companies use the extra financing:
improve facilities and conduct renovations
invest in major equipment
boost working capital
build up inventory

Often, even businesses that have enough capital for an expansion or equipment investment opt for a
loan instead. This leaves them with the operating cash to cover unexpected expenses, while the new
income generated by the purchase or expansion covers the cost of the loan.

Unfortunately, the time when you need money the most is when it's hardest to get a loan: during the
startup phase. You simply won't get a new business loan by walking into a bank with an idea and
enthusiasm - and the same goes for buying an existing business. You need to demonstrate an
understanding of the industry, business acumen, and commitment.

Surprisingly, lenders are routinely approached by would-be business owners who have little or no
specific knowledge about the industry they want to enter. Don't make this mistake. Instead, prepare an
in-depth analysis of your market, projected expenses and income, and other details. Show them you're
committed by doing the research before you ask for a loan.

It helps if you and your management team have experience in the industry, especially ownership
experience. Prior success running other types of businesses can help, too, but the more relevant your
experience, the better.

Many lenders will also expect to see that you've made a personal financial commitment to the business,
and they'll ask how much of your own money you're investing. You won't necessarily have to put up
your house as collateral - but some lenders may require it.

When you start a business, you usually have two ways to raise the capital you need: loans and equity
contributions.  The advantage of a business loan is that if your business prospers, the lender is only
entitled to an interest return on its loan -- not a percentage of the profits or a share in the company that
an investor would expect.

Whether you obtain loans from a bank, individuals or other lenders, a number of variables can affect
how good or how bad they are for your business. Virtually all of these variables are negotiable: There
is no such thing as a "standard loan."

You should be sure to negotiate the following points if you plan to get a loan for your business:

Due date. You need to set a date when the loan is to be repaid. This can be formulated as a
lump-sum payment at the end of the term of the loan or as a periodic payment of principal with a
final payment. For example, you can agree to borrow $50,000, with entire principal due in two
years, or you could agree to repay the principal in 20 equal monthly installments of $2,500. In
any event, make sure that the payment schedule is reasonable given your anticipated cash flow.
Be aware that interest will be charged to you no matter what.
Interest payments. When a lender establishes an interest rate, it must comply with any
applicable state usury laws. Often, however, usury laws will not apply to banks. The law may
also allow a lender to charge a higher interest rate for business loans than for personal loans.
The interest payment dates should be clearly laid out -- the most common method requires
monthly interest payments due the first day of each month. You may also try to adjust the timing
of your interest payments to match the cash flow patterns of your business.
Loan fees. The lender may charge up-front loan or processing fees. Check these fees carefully,
and try to get an estimate as soon as possible to help you evaluate the loan package.
Prepayment. Ideally, you want to be free to pay off the loan at any time before its due date.
Make sure that your loan agreement or promissory note gives you this flexibility and try to avoid
a prepayment penalty for paying off the loan early.
Defaults. The lender may define a variety of events that will constitute a default on the business
loan, including failure to make any payment on time, bankruptcy, insolvency and breaches of any
obligations in the loan documents. Try to negotiate advance written notice of any alleged default,
with a reasonable amount of time to cure the default.
Grace period. You should try to get a grace period for any payments. For example, the
monthly payments may come due on the first day of each month, but they won't be deemed late
until the fifth day of the month.
Late charge. If the loan includes a fee for late payment, try to make sure that it is a reasonable
charge.
Collateral. The lender may insist on a pledge or mortgage of some asset to secure the loan. If
you default on the loan, the lender is able to seize the asset and sell it to repay the money owed
to the lender. If you are required to provide security, try to limit the amount you have to give to
secure the loan.
Co-signers and guarantors. A lender may ask for a co-signer or guarantor as a way to further
ensure that the loan will be repaid. A co-signer or guarantor runs the risk that their personal
assets will be liable to repay the loan. If you ask someone to co-sign the loan with you, you may
want to draw up a co-signer agreement to let the person know how you will repay them if you
default on the loan.

Impress your lender by pulling together all your documents. It will expedite the process of getting your
business loan.

There are four basic factors that all lenders look at before they will agree to loan you money for your
business:

Credit history. One of the primary factors lenders look at is the condition of your personal and
business credit.
Vested interest. Business loan applicants should have a reasonable amount of equity invested in
their businesses. Lenders want to know that you will work hard to make your business a
success. When they see that you have invested a substantial amount of your own money in your
venture, they will assume that you will work hard to make it a success. Strong equity with a
reasonable amount of debt can help a business weather tough economic times. Little or no
equity leaves a business vulnerable, increasing the risk of default.
Working capital. Working capital is your current assets less your current liabilities. Working
capital can also be thought of as cash on hand, or what is available to pay current debts and
keep your business running. A lack of adequate working capital increases the risk that your
business will fail, and makes lenders much less likely to issue you a loan.
Ability to repay. Banks want to see two sources of repayment: cash flow from your business
and a secondary source — typically collateral. Lenders will look at your past financial
statements, including those of any business partners. They will want to see your:

Personal assets and liabilities
Personal tax returns for the past three years
Balance sheets for the past three years
Profits and loss statements for the last three years
Accounts receivables and payable aging

If your business has consistently made a profit, you are more likely to get approved for your business
loan. But if your business has not been consistently profitable, you can increase your chances of getting
a loan by including detailed information of new opportunities, new contracts, or other information

The Loan Guide provides access to the best sources for free information on Business Loans,
Commercial Loan, SBA Loan, Venture Capital or Private Business Loans information.