Starting a business can be very financially rewarding, but it's probably going to cost a lot of money upfront to get it up and running. Most entrepreneurs don't have enough cash available in liquid assets, so they take out business loans to get the start-up funds they need.
First Bank of the Lake is proud to offer affordable business loans at the Lake of the Ozarks for anyone thinking about starting a local business. Here are a few quick facts about business loans to help you better understand the process.
1. You Have To Have A Business Plan.
When you're applying for a personal loan, you have to submit pay stubs, bank statements, tax returns, and other information that indicates are financially stable and responsible. When you apply for a business loan, you have to submit a complete business plan. Among many other things, this plan will outline estimated costs, estimated profits, and detailed descriptions of how your services will be rendered. Your lender will use this plan to evaluate the chance your business has for success (i.e., the likelihood that their loan will be paid back). Without a proper business plan, you may have difficulty getting approved for a loan.
2. Your Personal Credit History Still Matters.
Your personal credit rating won't be the only factor banks consider when evaluating business loan applications, but it still matters. Your personal credit report is a number designed to indicate your trustworthiness as a buyer - the higher your number is, the more likely you are to pay back your loan in a timely fashion. Before applying for a business loan, you should find out what your current score is and, if necessary, take steps to improve it. Paying all of your bills in full and on time is the best way to raise your score, but little things like keeping the outstanding balances on your credit cards low can help as well.
3. Your Other Debts Will Be Considered.
Lenders are looking for ways to ensure that you will pay back your loan in a timely manner. If you currently have several sizable personal loans, that may impact your ability to get a business loan. These personal loans can be in any form - auto loans, student loans, mortgage loans, etc. Other forms of debt, such as credit card debt, may also be considered. If you want to increase your chances of getting approved for a business loan, you may want to dedicate some time to paying off any outstanding loans first.
4. Your Company Should Have A Comfortable Cash Flow.
In some cases, business owners take out loans to help them expand their companies (rather than getting them off the ground). In these cases, it is crucial that you can demonstrate a healthy cash flow. This is best indicated by the average amount of money you have in your bank account at any given time. Higher balances mean that you will be able to recover from any minor setbacks your company may experience along the way, such as a building repairs or a client who does not pay their bill.
5. You Should Be An Expert In Your New Field.
When they extend a business loan, your lender is making an investment in your company. Consequently, you may have trouble getting a loan to start a company in a field you know nothing about (as your lender would probably view it as a risky investment). Instead, you should set yourself up for success by only starting companies within fields you know well. Not only will this increase your chances of securing an affordable loan; you will be in better position to run a successful, profitable business.
First Bank Of The Lake Can Help With Your Business Loans!
If you are thinking about applying for a business loan at the Lake of the Ozarks, let us know! Our trusted Lake of the Ozarks business lender would be happy to sit down and discuss your options with you. We have a dedicated SBA lender that would love to talk with you about how a small business loan could help your company. Stop by and see us or give us a call to get started.
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4558 Osage Beach Parkway
Osage Beach, MO 65065