![\"Kim](\"http:\/\/www.financenewmexico.org\/userfiles\/Kim%20Blueher%20photo.JPG\")
Kim T. Blueher, Director of Lending, WESST Corp.<\/p><\/div>\n
Asking for money is something no one likes to do.\u00a0\u00a0 Asking to borrow money can be just as difficult. \u00a0The outcome will depend on how prepared you are.<\/p>\n
First, research the different loan programs available throughout New Mexico.\u00a0It would be a waste of time to apply for a loan that doesn\u2019t fit the requirements of your business.\u00a0Conversely, it would be a shame to miss out on a loan program that is perfect for your company because you aren\u2019t aware of it.<\/p>\n
Make sure you understand words you may not normally use \u2013 words like assets, liability, net worth, gross or net profit, collateral, receivables, payables, amortize and depreciate.\u00a0Having a working knowledge of these terms lets the lender know that you understand the financial part of your business.<\/p>\n
Obtain your credit report.\u00a0This document is one of the most important criteria that lenders evaluate when they are considering a loan request.\u00a0It is essential that you look at your own report at least once a year to make sure that the information is correct.\u00a0You can also learn your credit score, which indicates how well you have paid your debts. Many lenders will not approve a loan if the credit score is too low.
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What if your credit report doesn\u2019t look so good?\u00a0\u00a0 Some lenders are flexible in this area and will appreciate a letter of explanation.\u00a0Obstacles that may be insurmountable include bankruptcy within the past 1 – 3 years, tax liens, unpaid judgments, unpaid child support and student loan defaults.\u00a0These should be taken care of and cleared off the credit report before you apply for a loan.<\/p>\n
Other issues, including too much debt, unpaid medical bills, late payments and charge-offs, require a letter of explanation because the lender will want to know the circumstances and your plan to handle the situation.<\/p>\n
Lenders also want to understand both your personal and business financial condition.\u00a0A personal financial statement and personal income tax returns will be part of a loan request package for most loan programs.\u00a0Historical business financial information, including balance sheets, income and expense statements and business income tax returns, will be part of the package.<\/p>\n
If the business is new, financial projections will be important.\u00a0The lender will look for financial strength \u2013 not too much debt \u2013 and enough cash flow for you to make loan payments.<\/p>\n
There is constant debate among lenders about the importance of a business plan. For the most part, it is extremely beneficial for a start-up business owner to take the time to write a business plan.\u00a0A well thought-out and researched plan can help mitigate the high risk of starting a new business.\u00a0Most lenders realize this and will ask for one.<\/p>\n
On the other hand, it takes time to write an in-depth business plan.\u00a0Some lenders recognize that borrowers often don\u2019t have the time, and for that reason, they don\u2019t require one.\u00a0As you research the different loan requirements, find out about the necessity of a business plan.\u00a0Keep in mind, however, that investing time to write a good plan may make the difference between the success and failure of your business.<\/p>\n
Every lender wants to see borrowers have something at risk, something they would not ever want to lose.\u00a0This could be collateral in the form of cash or another asset owned by the borrower or the business.\u00a0It could be a car, equipment, or equity in real estate.\u00a0Some community lenders allow collateral in the form of artwork, jewelry, a big-screen TV or your child\u2019s tricycle.<\/p>\n
Recently I met with a woman who was looking for money for a new business.\u00a0She said, \u201cMy goal is to be able to borrow enough so that I don\u2019t have to put in any money of my own.\u201d<\/p>\n
No lender wants to hear that.\u00a0Borrowers ask lenders to invest in something in which lenders have no control. \u00a0Lenders want assurance that borrowers will work very hard to repay their loans.<\/p>\n
Asking for a loan is very much like a negotiation.\u00a0The more you understand the needs of the person on the other side of the table, the more likely you are to walk away with the money.<\/p>\n
For more information about WESST\u00a0Corp. services, go to www.wesst.org<\/span><\/strong><\/a>.<\/p>\n <\/a>Download 5_Getting a Small Business Loan PDF<\/a><\/div>\n","protected":false},"excerpt":{"rendered":" Ways to prepare yourself before asking for a loan. Continue reading