How to Get a Small Business Loan (must edit)

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If you're starting a small business in Texas, chances are you'll need some form of financing. Very few entrepreneurs are able to provide all the funds needed for business startup, and unless you can find an investor who has deep pockets, you're probably going to be considering a loan.

In order to make that happen, you're going to have to convince your lender or lenders that your business is going to be profitable. The lender's main concern is whether you're going to be able to make enough of a profit to pay back what they've loaned you, with interest. The more successful you can be at convincing your potential lender that your business will, indeed, turn a profit, the more likely you are to get approval for your loan. So, what do you do?

First, find out what your bank is going to require. They'll have certain minimum qualifications for small business loans, such as good management, steady cash flow, collateral and/or financial reserves. Don't hesitate to ask your loans officer to be very specific about exactly what their requirements are.

Next, get your information in order. You'll need to provide your lender with a balance sheet, so that they can understand exactly what your current assets and liabilities are. Obviously, they're going to prefer assets over liabilities. You'll also need an income statement. If you're just starting a small business in Texas, obviously you won't have an actual income statement, so if this is the case, then provide a sales forecast. Your lender will use these documents to determine the effectiveness of your business model, and how profitable your business is likely to be.

Also provide CVs for all members of your management team, and make sure they focus on success stories. This is especially important if your business is a start-up.

The most important thing you can do is invest your own funds. This is for two reasons – first, lenders are usually willing to help you end up with the full amount of funding that you need, but they won't want to provide you with all of it. Second, it shows your lender that you have confidence in your venture and you're committed to it.

You may not get a small business loan right off. But keep in mind that just because one lender said no, it doesn't necessarily mean that you'll get the same response from the next one you approach. Be persistent. You can also seek assistance from a Texas small business development center. They're committed to fostering small business growth, and can provide you with a wealth of resources.
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