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How to Get a Business Loan- An Insider's Perspective
The Business Monthly - Jun. '99

By Rajiv Mahajan

One obstacle facing nearly every start-up business is the business loan--in particular, the process that often casts a dark shadow over it.

For those thinking of starting their own business, the following comprehensive plan is recommended to send you on your way to a successful business.

Without a business plan you have no yardstick by which you can measure performance. Careful consideration should be put into every aspect of this. The key to any business plan is taking your time and seeking the advice of professionals.

Once the business plan is in place, shop for a lender--preferably a small one.

A small lender will be much faster in responding to you than a large bank which may take one to two months before giving you an answer--quite a waste of time, especially if the answer is no.

By contacting the local SBA Office you can get a complete listing of banks (including the small ones). This is particularly beneficial since certain banks may not have jurisdiction in your particular area.

Not only should you be careful in your selection of lenders, but you should also submit the same loan package to various banks. This is recommended to increase the odds of approval. Your tax returns are an important thing to keep in mind. Never give a bank the answer, “I don't know” or “I don't have.” Make sure that you have your tax returns in hand when you walk through the bank door.

It's important that for every aspect of a business loan, you prepare carefully and seek the advice of professionals. For instance, knowing your debt ratio and how much of a loan you can expect is crucial. For this, you'll need to consult your accountant. For other things, like the business plan, you should consult a marketing group. These things cost money, but it's well worth it if you expect to get the loan and have a successful business.

Finally, provide the bank with a list of business associates. Although this is not always required, it is advisable. This list should include, but not be limited to, accountants, legal advisors, customers, vendors and memberships in any organizations such as the Chamber of Commerce. After everything is in place, the final aspect is your presentation. This is by far the most important part. If you fail here, all of your efforts are wasted.

Remember, requesting a loan is not nearly as important as presenting it. Make sure you know what you want, believe in yourself, and be knowledgeable in your product or service. And, above all else, seek help from other professionals.

Rajiv Mahajan, CPA, is president of Management Ultimate Solution, a Columbia-based accounting software developer. He can be reached at 443-259-0091 or by visiting the web site at http://www.musinc.com.

Management Ultimate Solution, Inc.
6851 Oak Hill Lane, Suite 102
Columbia, Maryland 21045, U.S.A.
Phone: 443-259-0091 Fax: 443-259-0095
e-mail: info@musinc.com website: www.musinc.com
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