Applying for a Loan
Most beginning entrepreneurs, whether they are 14 or 40, find it hard to get a loan from a bank. Having a good business plan is crucial if you choose this financing option. Bank officers are notoriously skeptical of new business start-ups and see them as very risky ventures. Unless your business has at least three or more years of profitability that can be verified by financial records, you aren’t likely to qualify for a bank loan. Additionally, many banks require some type of collateral to secure the loan — assets the bank can seize and liquidate if you default on the loan.
So if bank loans are so hard to get, where do business owners get loans? Here are some of the sources entrepreneurs tap into:
- A very high percentage get personal loans from friends and family.
- Some use credit cards to give themselves short-term loans.
- Some qualify for special government loans through the Small Business Administration (www.sba.gov) and other agencies.
Whether you are asking a bank or a government agency for a loan, there is a definite criteria that is used to judge your “creditworthiness.” Lenders often refer to this criteria as the Five C’s of Credit. Click here to go to the SBA website and read about the criteria you will have to meet if you apply for a business loan: http://www.sba.gov/financing/basics/applyloan.html
To help you remember what you read about applying for a business loan, we have prepared a note sheet on Applying for a Loan. Click the link below to download the note sheet. If you are taking this course for a grade or for credit, you will turn in this assignment to your advisor or teacher.
Download Worksheet 7: Notes on Applying for a Loan
This is a fill-in PDF form. You may either print the form and hand write the answers, or type your answers into the form and print. (Unless you have Adobe Acrobat on your machine, you will not be able to save your responses.)
After you have completed your form, click the race car to continue
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