The lowdown on bank loans

Tips on applying for start-up capital

Q: What should I do if I want to ask my bank for a start-up business loan?
A: Craig A. Reynolds, president of Commercial Capital Corp. in New York, one of the most active Small Business Administration lenders in the nation, offers the following advice to small business owners looking for start-up loans:

  • Be prepared and organized. Write a detailed business proposal, outlining how much money you will need, why you need it and, most important, how you will pay it back. Failure to show a lender that you are organized will only convince them that you are not a good credit risk.
  • Make sure your credit history is accurate. Lenders determine if you will be able to repay a loan based on your business credit report. Therefore, it is important that an accurate picture of your business be presented to lenders. In addition, your work history and letters of recommendation will also be used as indicators of your creditworthiness.
  • Be sure to present adequate collateral. A lender will focus on your assets and those of other principals in your company.
  • Invest in yourself to inspire confidence. Investing personal savings or equity in your business venture will show lenders that you have a strong commitment to seeing your endeavor become a reality. Also, most lenders will not finance 100% of your business.
  • Prepare a strong business plan. The start-up business plan should describe the purpose of the business, the management team, marketing strategies for your product or service, why the business will be a success and how you intend to repay the lender. The start-up business plan not only helps lenders assess your creditworthiness, but will also keep you organized and focused on the purpose of your business venture.
  • Present a strong track record. Your past accomplishments, employment, business and technical skills should represent your ability to be an organized, effective and results-oriented worker.

Mail your small business-related concerns to What’s Your Problem? at black enterprise, 130 Fifth Ave., 10th Floor, New York, NY 10011 or send an e-mail to gallopg@blackenterprise.com.

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