In the hustle and bustle of operating a small business, there are times when help is needed in the form of a business loan˳ Typically, within the first two to three years of business operations, product and/or service offerings are validated and proven out by the marketplace˳ In the event that the business is able to attract demand and then to sustain and grow it profitably, there will come the inevitable need to get a business loan in lieu of obtaining private equity from investors˳ Why does this happen? Well, for one, the speed of cash received does not equal the speed of cash spent˳ Not all the time, but most of the time, the business becomes quite efficient in spending cash by providing a product and / or service, but does a poor job in recouping cash spent in a quick and efficient manner˳ As the business gets better at doing business, this inequity in the cash flow cycle smooth’s out˳
Thus, business loans are understood as one of the necessary blocks to building a solid business˳ Not if, but when the time comes to take your business to the next level whether in satisfying growing demand for your products and / or services, taking advantage of business deals with tight deadlines, or paying off old loans with new loans with better terms, make sure you are ready to make the case˳
Making the Case for a Business Loan
The absolute best case you can make in getting a business loan is the planning you do before you actually need one˳ A bit backwards thinking you may observe, but right nonetheless˳ See, most lending sources are conservative by nature due to the risk of losing money from nonpayment˳ Thus, by proving to the lending source your ability to repay with interest the business loan from historical evidence (and sometimes future projections based on practical, real life variables) such as a growing trend in both sales and margins (both gross and net), solid equity position as shown from a low Debt to Equity Ratio, and your track record in repaying other creditors on time, you will have made a clear case in obtaining a business loan˳ Remember to keep as a part of your overall business plan the need one day to obtain a business loan and operate your business accordingly˳ You’ll be glad you did˳
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