When I first started my bookkeeping business in 2012, I applied for and received a loan for $5,000 to jumpstart my growth. My intention was to use the money to build a website, market my services, buy supplies and have some reserves for miscellaneous expenses. The loan was through an organization called Youth Business America (YBA). YBA is now called “Sky’s The Limit” and is a non-profit organization to empower underrepresented entrepreneurs between the ages of 18 and 29 with the resources they need to fulfill their business dreams.
My process for obtaining the loan took about six months, from the time I found out about YBA to receiving the $5,000 loan in my bank account. I was introduced to the organization by Gwendolyn Wright of the Wright Consultants. She provides free consulting through the Renaissance Entrepreneurship Center in San Francisco. Gwendolyn helped me with the beginning states of creating a business plan and then suggested that I look for a loan to help fuel my business. She connected me with Zach Petry, the head of YBA -Oakland at the time, and I took action from there.
With YBA, I had to create a thorough business plan, fill out paperwork, go through a couple of interviews and then present my business idea to a group of bankers. I loved the entire process. It was just like my experience in 9th grade when I took an entrepreneurship class. My teacher, Mr. Fox, had us create a business plan for an idea we each created and at the end of the semester, we presented our idea to bankers. It was so much fun.
If you wish to get a loan for your business, whether it’s $5,000 or $250,000, here are the steps I recommend you take.
8 steps to getting a loan for your small business
Start looking for business loans well before you need the money. I recommend at least six months before you need funding. If you do not have six months, it is ok. Just keep in mind that the process will require patience.
Research opportunities in your local area. There are many local organizations dedicated to supporting the small business community with financial resources. A good place to start is your local Chamber. Ask the folks in Economic Development if they know of organizations that provided funding to small businesses. Another place to check is your local bank and credit union. Ask the small business bank managers or credit union managers if they know of funding resources. These financial institutions will likely also have their own business loan programs. They tend to have very strict requirements, but it is worth checking out.
Make a list of the opportunities in your area and review their requirements. Do you need references with your application? Do you need to be in business for a certain period of time? Do you need to create a presentation? Is there a minimum or maximum amount you can borrow?
Find a time to meet with the organization. One of the things that made my application stand apart was that I made the extra effort to meet the leaders of YBA-Oakland in person before I submitted my application. I wanted to make sure I was fully prepared and provided all the information they needed to see that I was a great fit for the loan program.
As you go through the process, create and fine-tune your business plan. A business plan includes a mission statement, market research, financial projections and anything else to demonstrate you are a good candidate for this loan. Be sure to ask the lending organization if they have specific information they want in the plan.
Interview businesses within the same industry. As a part of your research process, interview other business owners in the local area and entrepreneurs within your industry. This will give you insights you may otherwise not have considered. Keep in mind that business owners are busy, so be respectful and keep your questions to one or two per email. If they are willing to meet up, offer to buy them lunch or coffee and keep the conversation to twenty or thirty minutes.
Prepare your financial projections. The financials are the most important aspect of the business plan to lenders. It will show them how likely you will be able to pay back the loan. In your projections include the main revenue streams, the cost of delivering these services or products, and your estimated sales.
Create your presentation. Most lenders will require some sort of presentation. Start preparing yours as you work on your application. Ask if you can do a mock run-through with the potential lender for additional feedback. I did this with YBA and it was very helpful.
