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Small Business – Additional Notes on Getting a Loan

English: Cash Money Store for short term loans...

English: Cash Money Store for short term loans on Yonge St., Toronto downtown, ON, Canada (Photo credit: Wikipedia)

It is often said that small business people have a difficult time borrowing money, but this is not necessarily true. Banks make money by lending money; however, the inexperience of many small business owners in financial matters often prompts banks to deny loan requests.

Requesting a loan when you are not properly prepared sends a signal to your lender. That message is: “High Risk!” To be successful in obtaining a loan, you must be prepared and organized. You must know exactly how much money you need, why you need it, and how you will pay it back. You must be able to convince your lender that you are a good credit risk.

Terms of loans may vary from lender to lender, but there are two basic types of loans: short-term and long-term. A short-term loan generally have has a maturity of up one year. These include working-capital loans, accounts-receivable loans and lines of credit. Long-term loans have maturates greater than one year but usually less than seven years. Real estate and equipment loans may have maturates of up to 25 years. Long-term loans are used for major business expenses such as purchasing real estate and facilities, construction, durable equipment, furniture and fixtures, vehicles, etc.

- See more at www. cashaccountingcpa.com

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