Application (Includes Personal Guaranty: Fill & Download for Free

5 Step Guide- How to Get a Business LoanMoney is the lifeline of any business, so whether you’re starting a business or running an existing one, securing financing is a major factor, especially for small businesses. Many budding entrepreneurs find the task daunting and don’t even know where to begin.Here’s a simple yet practical guide on how to go about preparing to apply for a small business loan.1. What criteria do banks look for in making small business loans?Different banks or lending institutions may have different standards, but in general, in order to consider your application for a small business loan, banks will require:The loan must be for a sound business purpose. For SBA-guaranteed loans, the business must be eligible based on size, use of loan proceeds and the nature of the business (no lending, speculating, passive investment, pyramid sales, gambling, etc.)You and your partner(s) are of good character, have experience and good personal and/or business credit historyAbility to pay back the loan- reasonable to strong collateral (personal and business assets) is very important. SBA expects the loan to be fully secured, but we will not decline a request to guaranty a loan if the onlyunfavorable factor is insufficient collateral. And of course, owners must have personal equity investment in the business/skin in the game.2. What information will you need?Different lenders may require more or fewer documents, but in general, you will need:Personal and business credit historyPersonal and business financial statements for existing and startup businesses and as well as a projected financial statementsStrong, detailed business plan (including personal information such as bios, education, etc.)Cash flow projections for at least a year, andPersonal guaranties from all principal owners of the business3. How can you set yourself up from the beginning to make the process easier? (i.e. accounting systems, etc.)Be prepared; be thorough; be truthful.Choose your lending institution carefully. Larger banks tend to shy away from small loans as they are less profitable and take the same amount of underwriting and servicing. That doesn’t mean large banks do not make small loans; it is just more difficult.Approach banks or lending institutions you have worked with or are a customer ofExplore community banks and Credit UnionsTalk to a lending officer and find out exactly what documentation they requireBe thorough, bring everything they ask. Many loan applications are denied or face unnecessary hurdles because of incomplete applications.Even before you start gathering and organizing the information required by lenders to consider your application, you should educate yourself regarding business loans so you can understand and discuss intelligently with the lending officers when the time comes.4. What is the typical size of a small business loan?Small businesses come in many sizes, from a start-up of a one-person company to hundreds of employees, and their financial needs vary accordingly, so “typical” also varies. That said, in the banking industry the median small business loan is about $130,000 - $140,000 with highest around $250,000. SBA small business loans range from about $5,000 (microloans) to $5 million (largest guaranteed) with the average loan around $371,000.5. How can you get financing to start a business since many banks want to fund growth?Start-ups are probably the most difficult ventures when it comes to securing financing. Many start-up businesses seek financing from family, friends and credit cards. If the credit is sound, the business plan strong and you have enough personal resources to invest and collateral to guarantee, smaller, community banks and other community financial institutions and Credit Unions may consider lending you money.

In general, absolutely not.If you have a portfolio of credit cards, and good credit, then you can go from one 0% promo rate card to another, to another, to another. But, at some point, you’re going to begin paying interest. And, those credit card APRs are going to be higher, or double, what you could get from a bank.Cash-flow wise, what credit cards offer are lower repayment requirements than a bank loan (installment loans). — As you can imagine, it’s very complex.If you are very lucky, you might have a 7.9% credit card (c/c) that has a low minimum payment.You may get a bank loan for prime + 1% (which — I’ll just choose 6.5% as an example). You can look up “prime +1” — but, the numbers I’m using here are just pro forma. — It’s an example.What you’ll find is that, if you have a 6.5% installment loan, you have a term (of repayment). — It’s set at the beginning of the loan. You have to pay a certain amount, based on the amount of the initial loan and the interest rate, so that in X number of years, the loan is paid off.A credit card is a revolving line of credit, so you don’t have to pay it off so quickly. Many c/c’s have terms of 13 years or more, so you can pay very little per month, helping you cash-flow-wise, but you will end up paying multiples of the amount you took out at the end of that very-long-term.Let’s take Texas. The maximum interest rate that can be charged, by law — lest it be usury (a felony) — is 18% per annum.Many c/c’s charge more than 18%.Can you get a c/c with an APR of 0% for some period? — Sure.Is it likely your bank will charge you 17% APR on an installment loan? — No.Can you do an interest-only loan? — Sure.These are the “balloon payment at the end” loans. — You take out a loan for $20,000; you only pay the interest each month, and then, you hope, when the term of the loan is over, you can refinance the loan. Otherwise, you will owe $20,000 immediately.If you can’t, and the bank is unwilling to work with you, that makes your collateral forfeit, and it also hurts your credit score.Most of these loans, just like trade credit agreements, have a personal guaranty contract in place, which defeats everything about having a limited-liability type of business construct.Bank loan and credit card financing should be your backup. — Get trade credit with your vendors/suppliers. — These are, by nature, 0% if you pay on time.If you can do that with one trade creditor, then you can start doing it with many trade creditors.If you make concrete, then you will need a cement supplier. — If you can get that supplier to allow you to buy cement on NET 30 terms, then you can buy mostly whatever you want and only have to repay the amount in 30 days. INTEREST FREE.This is how you grow a company. — If you find yourself unable to monetize your receivables within that time frame, then — and only then — hopefully, will you have to fall back on your bank promises or credit cards.A robust capital structure, for most every company, should include a revolving line of credit with a bank. — The goal is never to need to draw that down. To do so is a sign you are in trouble, and the bank knows it.If you are talking about taking out a collateralized installment loan from a bank, then you are talking about (hopefully) necessary CapEx (capital expenditures). — If you need a new work truck, your cement vendor isn’t going to pay for that upfront, and you’re not going to want to come up with the money to pay for it in just 30 days.You may not be able to get, in the beginning, bank loans or commercial credit cards or trade credit agreements without your own personal guaranty. That means — even if you are a corporation or limited liability company, you are still on the hook for the business’s inability to pay.In my experience, I just fill out the applications (for trade credit) and omit the personal guaranty page, as if I forgot to print out the last page or two.You may be approved for trade credit based on what’s on the application, and you’d be a fool to just — because it’s part of the application — fill out the part that says, if the business can’t pay, you will.If you get a call from them saying they didn’t receive the personal guaranty, just say — “Oh. That’s because my assistant is new. He is terrible at his job and I’m gonna have to fire him. I’ll get it to you as soon as I can get back to the office.”LOL — and then, don’t send it.An FDIC-insured bank is not going to let you off like that.A commercial credit card issuer might let you off with no personal guaranty, but expect the rate to be high.Only when you spend lots of time assembling a portfolio of 0% or other low promo rate cards will he credit card aspect be cheaper than the banks.The credit cards just have lower minimum payments than bank loans do. — That’s going to be true whether you have an installment loan or an interest-only loan, in most cases.

If your annual salary doesn't equal at least 40 to 50 times the monthly rent, you'll need a guarantor--someone who will co-sign the lease and promise to make the rent payments in full if you default. You may also need a guarantor if there is an issue with your credit or liquid assets, you've been in a job for less than a year, or you're retired.While a guarantor doesn’t need to be a relative of the applicant (work associates or friends are fine, too), many landlords do require that they live in the United States and typically in the tri-state area (New York, New Jersey or Connecticut).“The landlord has to be able to get to the person who is guaranteeing the apartment in case it’s not paid,” Town's Balassone says. “They can’t be running all over the world trying to find their money.”For this reason, even foreign nationals with wealthy family members abroad will need to find a stateside guarantor.A guarantor, in turn, has to provide extensive paperwork to complete the application, including bank statements, pay stubs and tax returns. They’ll also need to earn an annual salary of about 80 times the monthly rent and have good credit. And if you've got a roommate, take note: A guarantor is typically responsible for guaranteeing the entire lease, not just one resident's share of the rent, Hamm says, although multiple guarantors may be allowed.If you'll need a guarantor, have one lined up beforehand, and let them know what paperwork they’ll need to submit and what will be expected of them, Hamm recommends.“There’s nothing worse than finding the apartment, falling in love with it, putting in the application and then finding out that your guarantor doesn’t want to provide any of the paperwork,” he says.If you don't have a guarantor but need one, Insurent Lease Guaranty can serve as an institutional guarantor fee of typically 85 percent of one month’s rent for U.S. citizens and 110 percent of one month’s rent for foreign nationals, the company will back approved applicants.