Starting your first business always brings a mixed feeling of joy, pride, anxiety and risk. However, you must have a realistic plan in place like the revenues required, the expenses anticipated and an alternative financial plan to meet situations like credit crunch.
One of the first things you need to have for starting a business, other than a solid business plan is a strong credit history. Having a good personal as well as business credit history is one of the key requirements when applying for a business loan. So, before you go hunting for business loans for starting your first business, know your credit history.
The Right time for loan
Well, this may be one of the most arguable topics; however, there is no wrong time for availing a business loan. You must have heard a saying, “The easiest time to get a loan is when you don’t need one”. So it is wise not to wait until the time, you find yourself on the verge of debt. Moreover, it is hard to negotiate with lenders for the best deal, when you are time bound and desperate.
When you are starting a business, it is important that you consider availing business loan as a strategic business decision. It’s a ‘strategic’ decision because you need to evaluate your business properly and find exactly why you need a business loan – are you going to invest in building basic infrastructure or launching a promotional campaign. Whatever, you take the loan for make sure; you are able to take on the credit crunch and do not make way for subsequent debt.
Initiating the loan process
As you initiate the business loan process for your first business, make sure you get all your documents ready since lenders will scrutinize all your financial statements pertaining to personal credit history, business credit history(if any), loan repayment ability and feasibility of the business model. One of the most reliable place to opt for business loan – small or large is the Bank. Here is a list of a few of the documents you need to furnish to the bank.
ü Personal credit report - make necessary improvements and make regular repayments.
ü Business credit history – Ensure it is impressive.
ü Business plan - that ensures the feasibility of the business proposition.
The latest financial statements that typically include an income statement and balance sheet are sought by most lenders.