1. Look for a bank familiar with your industry that has done business with companies like yours: Before you set out to look for loan you must think of the industry that you operate. For instance, are you in the manufacturing, commerce, production sectors? This is necessary because some financial institution do not consider lending to farmers (production) or those in commerce. As well as knowing your industry, you must also know the size of your business. Again some financial institutions do not consider granting loans to Micro, Small and Medium Enterprises (MSMEs). Financial institutions who are risk aversive consider them as too risky businesses. 2. Gathering Documents: • Business profile. This document describes your business, including annual sales, number of employees, and length of time in business, and ownership. • Business plan. A business plan is particularly important for new businesses, as they lack a track record for lenders to go by. Your plan should convey all important facts about your business in a concise manner. Your business plan may range anywhere from 5 to 20 pages, plus financial projections. • Loan request. This should detail the amount of money requested, how the loan funds will be used, the type of loan, and the amount of working capital you have on hand. • Collateral. Describe what will be used to secure the loan, including equity in the business, borrowed funds, and available cash. • Personal and business financial statements. You will likely need to provide financial information for anyone who owns 20 percent or more of the business, including owners, partners, officers, and stockholders. Lenders will want to see a complete schedule of current debts with balances, payment schedules, maturity, and collateral used to secure other loans. • Be sure all the documents are neat, legible and organized. Type all your loan documents. Handwritten documents look unprofessional. Don't forget to include a cover letter You may also be asked to provide: • Balance sheets from the last three years. • Profit and loss statements from the last three years. • Cash flow projections indicating how much cash you expect to generate • Accounts receivable and payables aging, breaking your receivables and payables in to 30-, 60-, 90- and past 90-day-old categories. • Personal financial statements listing all personal assets, liabilities, and monthly payments, as well as your personal tax returns for the past three years. 3. You must be well informed and prepared: To show the extent of your preparedness, your business plan should also include answers to your banker's questions. These questions normally are: • How much money do you need? Be as exact as possible; although adding a little extra for contingencies will not hurt. • How long do you need it for? Be prepared to go into detail about what the money will do for you and why your business is a good risk. • What are you going to do for it? Businesses use loans for three things: to buy new assets, pay off old debts, or pay for operating expenses. • When and how you will repay for it? Your cash flow projections should provide a repayment time frame. Convince the banker of the long-term profitability of your business and your ability to repay the loan by using your financial projections and business plan. • What will you do if you do not get the loan? 4. Have Experience and Positive Attitude: You should have experience in the type of business you plan to run. If you don’t, lenders expect you to hire or partner with people who have the appropriate experience. Present yourself as an entrepreneur who can and will repay the loan. Boost your image by providing your loan officer with any promotional materials about your business, such as brochures, adverts, articles, press releases. 5. Discuss risk in your application: If you do not discuss risk, the bankers will assume that you haven't thought about risk. Bankers would want to know if you have planned for the major risks and how you intend to manage it. Then, there is also the risk of too much success. The demand for your products or service may exceed well beyond your expectations, and they would want to know how you intend to handle success. By: Harriet Otchere - Darko