In order to start or grow a business, or sometimes just keep the doors open and the lights on, many small business owners will need a loan. Some turn to family or friends, some find investors, some talk to a local banker about a small business loan in Vermillion County, and others seek an SBA loan.
Getting a loan can be a hurdle that takes time and causes stress, but knowing what to expect and understanding the process can reduce frustration. When you need a small business loan, here's some basic information that may help.
Why Do You Need the Money?
This is one of the first questions any lender is going to ask, so have a clear, specific answer ready. Be sure you include the benefits to the business.
What Type of Loan Should You Get?
The underlying reasons for the loan will help determine the type of loan you get. If this is a new startup, getting a loan will be difficult. Rather than look to traditional lenders, you'll need to have your own source of funds, such as personal savings. If you don't have enough money saved, you may have to borrow from family and friends, take out a personal loan, seek investors, consider a microloan, check out online lenders, try crowdfunding, or use credit cards.
You have more options if you're buying an existing business or if your business already has more than a year's history of revenue and expenses. In either case you might be able to leverage the accounts receivable, get a line of credit, get a small business loan in Vermillion County, IL, or qualify for an SBA loan.
Shop for the best loan. Determine the lender and financing most suitable for your situation. Compare small business loans in Vermillion County based on the total borrowing cost and terms. Make sure you can handle the payments, then choose your best option.
What Documents Do You Need?
If you apply for a small business loan, most lenders will want the following documents:
- Business and personal tax returns (for prior 3 years if available)
- Business and personal bank statements
- Business financial statements (balance sheet, income statement, cash flow)
- Business legal documents (Articles of Incorporation, business license, commercial lease, franchise agreement, contracts)
- Business Plan (the Small Business Development Center located at DACC can assist you)