We have a great choice of commercial loan companies at the end of this article, but give this article a quick read first.
One of the worst things you can do when you are thinking about how much of a commercial loan you will need is assuming that everything is going to go according to plan.
You may think this is an exaggeration, but you should almost double what you think you need. The number one cause of a business failing in the first few years is lack of capital.
You see, the reason is because, on paper, everything goes smoothly. Even with the best laid plans, there are factors out there that you cannot control. For example, what happens if the demand for your product mysteriously disappears, or a competitor a shop right across the street from you.
Or what if you are not as good a marketing person as you think Now you can’t attract customers to your store in the numbers you thought.
So here are some tips for you to consider when making your business plan.
1) Borrow enough money. You are not doing anyone any favors if you just borrow enough to get in trouble. Do not assume that the bank will loan you more money if you need it. It is not the banker’s job to determine if the loan amount and the business plan are accurate.
2) The commercial loan process is not a quick one. Don’t set a date for your grandng and then be disappointed because you have to change it. Get your financing in place first, then arrange your grandng party.
3) If you get turned down on your first loan application, learn from your mistakes. Don’t feel defeated. Find out from the lending institution why they turned you down, and make the necessary adjustments.
4) Be prepared to put in some money of your own. The banks are not going to take all of the risk, and they figure that if it’s such a good idea, you should put your own money in as well. The bank will require that you put in from 20%-50% before they grant you a business loan.
