It really depends upon a person’s situation for finding a small business loan. Lenders normally find small businesses to be high risk ones and so sometimes hesitate to provide them loans. Some sort of collateral is required to secure loans that one receives from lender. A business plan is necessary and documentation of personal financial resources is also considered mandatory.
For the very reason, reviewing personal financial situation prior applying for small business loan becomes mandatory. Since most of the time a personal guarantee is required to get a loan, personal financial situation needs more attention. Income and expense statements supported by bank statements, tax returns are mandatory for increasing the chances of finding loans. Other supporting documents are personal financial statement, automobiles, and house. The financial assets include mutual funds, savings account, stocks, health and life insurance.
U.S. Small Business Administration provides sufficient assistance so as to reduce difficulties in government loans. It is through its Small Business Development Centre (SBDC) located in states and cities that help is extended to prepare for a loan. It is true that the government does not lend out to small businesses directly but then certified lenders are assigned and are given the responsibility for participating in the U.S. Small Business Administration programs.
The Small Business Development center counselors, extend help, in-order, to make it possible for entrepreneurs get loans from private financial institutions. The most difficult part of preparing applications is taken care of. The counselors involve themselves in bringing personal finances to order, developing the perfect business plan and preparing business financial statements.
A commercial bank is one of the most common lenders that is certified and participates in government loan programs. SBA guarantees bank loans up-to 85 percent in 2010 to commercial banks. But for that, personal guarantee and collateral of security are required.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to