Creative - And Legal - Ways to Fund a Small Business Loan

A business loans proposal is an important element to getting money to start or expand a small business. Lenders are often reluctant to deal with cash loans to businesses that are not exceptionally profitable, due to the amount of risk involved. When a borrower does not pay back one of the extended business loans, the bank is often in a more vulnerable position than if dealing with an individual. This is why most business loans application packages need to show both personal and business strengths to gain funding approval.

Open a business checking account with the bank or credit union of your choice if you have not already done so. Depending on how urgent your need for one or more business loans is, you may best be served by waiting a month or so before trying to get a loan if you are a new customer. If you can and have not already, also consider doing your personal banking with the same financial institution. Carefully think about your business loans needs and write a proposal before approaching a lending officer for credit.

Write down your ideas before actually trying to commit them into a formal presentation. Things to include are your personal history (such as length of time living in the community), your credit history, your income, the age of your business, the purpose of your business, specific amount requested and what the business loans will be used for.

Obtain the primary business loans officer's name before drafting your proposal. This helps personalize your document, which is really more like a business letter than anything else.

Type your bank loan proposal using a word-processing computer program such as Microsoft Word. Be sure to address it to a person, using a salutation such as "Dear Mr. [Last Name Here]." Emphasize that you are an upstanding member of the community, financially stable, running or starting a profitable business and have a good credit history. If you do not have a good credit history, explain any problems you have had in the past such as divorce or medical emergencies without going into unnecessary personal stories. A simple note that you went through a divorce that caused credit blemishes will suffice.

Write at the end of your proposal that you hope your request for business loans merits serious consideration, and that you look forward to a long-term relationship with the bank.

Call or visit the business loans officer within a day or two of faxing, mailing or delivering your loan proposal. Don't be pushy; instead, be helpful and pleasant.

Remember that if this bank turns down your business loans request, there are others likely willing to work with you. Research other banks and credit unions in your area if this happens. Do not become frustrated if your personal credit becomes a major factor in the lending process. If your personal credit is terrible, you may be able to get a co-signer or use collateral such as equity in a house to secure your business loans.

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