Small commercial loans – how can your bank help your business grow faster than ever?

Whether you build an office building or need a new tipper or acquire the competitor or craft a beautiful website that is targeted at a niche for effective results, do you find yourself short of cash to enable your plans to take off?

Among the many options you have to create money and buy the most needed asset for your business, the quickest and simplest one is applying for a small commercial loan. A small commercial loan gives you the required flexibility and means to raise the thousands, sometimes without collateral.

Documents that banks need:

Your bank would need any or all of the following documents for review before granting you small commercial loan. Some banks might ask for other documents too.

• company’s financial statements
• your personal financial statements and tax returns for the past three years
• your monthly cash flow projections if you obtain the loan
• a detailed business plan
• specific details of how the loan will be used
• management profile

Guidelines

The key to obtaining small commercial loans is knowing the bank procedures. The processes are laid out clearly. Give yourself plenty of time to put together all the records required by the bank. You may also want to add the expense to create a professionally written business plan if you don’t have one already.

On the other hand, there are a variety of reasons bank give for not approving your small commercial loan. The reasons range from having lost your major customer to having increased credit checks in your records. Collect as many of those reasons and find a workaround by yourself or with a financial consultant. You may ask your friends and family the problems they faced while raising the dollars.

The numbers

The current rate for small commercial loans in the US is Prime + 2 to 9%.

The repayment period could be anywhere between 1 to 5 years depending on the size of the loan and your payback potential.

The ideal repayment period

One way to find your ideal payback period is the following:

• You need $x as a loan.
• Find the time it would take your business to make $x using the asset you plan to buy.
• This time or the minimum repayment period your bank allows will be the ideal repayment period.

When not to get a small commercial loan

There are occasions when a small commercial loan might not be the solution for your problems or it could adversely affect the business.

If you already have existing loans, another loan might not be the right solution. A financial consultant can tell you other ways to help your business succeed.

Look for cheaper options before you approach the bank. If you just need a little cash, you could ask your family and friends for a little business deal.

Other resources

BusinessFinance.com is an excellent resource that will tell you which banks will be ready to finance your business. This list comes in handy when you shortlist the banks you approach.

If you need between $5,000 and $35,000, Small Business Administration might be the ideal place to start your research.