- Since you are starting a new business, a lender must rely upon your personal financial history to see how well you handle money and how much of your own money you are investing. He will review your credit score and history, and is looking for a score of 700 or better. Prepare your monthly personal income and spending budget to show that your income is sufficient to cover expenses. Compile data about your personal assets and liabilities. This information includes real estate holdings and mortgages, vehicles and loans, household goods, and financial assets such as savings, money market accounts and stocks. Also, a lender wants information about your life and medical insurance.
Business Market Information
- Your new business information regards what you propose to do. A lender views small business startups as high risk, so you must present a strong case for business success. Prepare a concise and organized business plan. It contains a statement of long-term goals for business success, followed by three main sections. First, a description of your business product or service and its market niche that differentiates it from competing products. The next section contains an analysis of your market, its size, the competition and your customer demographics. This shows a lender that market growth will insure sufficient sales revenue to cover costs and provide a profit.
Business Financial Information
- Financial statements projected for the next few years are a critical part of your business plan. These include an income statement indicating revenues and expenses, a balance sheet that shows assets, liabilities and owner equity. Your proposed loan will be listed as a liability. A projected monthly cash flow spreadsheet that shows sources and uses of cash is one of the most important parts of your financial information. This worksheet reveals whether you will have sufficient cash to cover expenses each month. Since your financial data is projected for a few years, it must be based on a number of assumptions, especially about sales revenue. These assumptions must be realistic and not too optimistic.
Business Plan Assistance
- The toughest parts of your business plan, market analysis and the financial data, may require assistance. The United States Small Business Administration, which was created to assist small business startups and expansion, provides a nation-wide network of Small Business Development Centers (sbdc.com.au). A counselor provides free assistance to you for writing your business plan and understands the process for analyzing your market as well as how to produce projected financial documents.