New York State Funeral Directors Association

Many people dream about a job that fits their special skills and needs.

But entrepreneurs face daunting odds: An estimated four out of five businesses fail.

Why? Poor management is cited most often, while inadequate financing is a close second.

If you can work on perfecting your management skills, your credit union may be able to provide you with the money you need to start your own business.

HOW TO GET A SMALL BUSINESS LOAN

First, you’ll need to write business plan.

This plan should explain how you will manage, operate, and finance your company.

Call Directors Choice Credit Union and ask what our lending officers look for in a plan.

There is a lot of free assistance available for creating a business plan, such as through SCORE--Service Corps of Retired Executives or through the Small Business Administration.

To ensure a successful loan application, be sure to answer these 10 questions in your business plan:

  1. How much money do you need and what is the owner's capital commitment? A rule of thumb is that 20% to 30% investment in the company needs to come from the owner, from either personal cash and savings or equity in the business.
  2. What will you use the money for? Give a clear description of how you'll use the money and how you intend to pay it back.
  3. How will the loan affect your financial position?
  4. What will you pledge as collateral? You'll have to pledge some tangible asset--such as stocks, certificates of deposit, or property--to obtain a loan. If the loan is for the purchase of equipment or real estate, that can become collateral.
  5. How will you repay the loan?
  6. When will you repay the loan?
  7. If you don't realize projections, can you still repay the loan? For example, do you have a spouse with outside employment?
  8. How much can your business afford to lose and still remain viable?
  9. How will the business manage risk?
  10. For an existing business, how has it performed to date? Is the financial position of the business improving or declining?

PREPARING TO MEET WITH THE LENDER

You’ll need to provide the following information when you visit the credit union to apply for a business loan: Confident woman texting her business partner about a Business Loan approval

  • Purpose of the loan
  • History of the business
  • Projected opening day balance sheets
  • Lease details
  • Amount of investment in the business by the owner(s)
  • Projection of income, expenses, and cash flow
  • Signed personal financial statements
  • Personal résumé
  • Names and contact information for at least three credit references
  • List of business and personal assets that could be used as collateral

For existing businesses, also bring financial statements for the past three years, schedule of term debts, and aging of accounts receivable and payable.

This is a lot to remember. Take each step, one-by-one. If you need some assistance, feel free to contact one of our helpful associates at Directors Choice Credit Union.

Call us toll-free at 800-593-5920 or visit us at DirectorsChoiceCU.com and learn what resources we offer to get your business dream started!

© 2018 Credit Union National Association Inc. 2018


 

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