Securing financing for small business is extremely challenging. You may be in need of loan because you are starting up with your dream project. Lenders and banks are better option, but they have their own sets of rules and regulations. Businesses with limited assets usually find it difficult to get themselves a secured loan. Banks or lending institutions are concerned about the repayment of loan and there are several business owners that fail to reassure them.

While submitting the online small business loan applications, the first thing that must be taken into consideration is how much fund you actually need? This can be achieved by evaluating the overall needs and status of your business. Remember each lender has different policies, so compare the rates and criteria before applying.

Even before you approach a lender it is vital to understand the fundamentals of secured loans. Some want additional funds to either extend their business or to procure a new machine.

Prove your creditworthiness

Financial institution lends money, but their aim is to make money out of their clients. Just like you need a lender, the lending companies also want business houses that want money. Lenders give more attention to an application that provides experience of managing a similar business successfully for someone else.

Prepare an application that has anticipated questions covered - why do you think that the lender must believe you to run a business successfully, where others have been unsuccessful? Prepare the answer thoroughly along with detailed justification of - how will you use the money? How will you pay off the loan?

Your credit history

Positive credit scores provide the lenders an idea about your responsibility. Business owner"s personal financial status also plays a role in lending decision. Clear up the blemishes in your credits, if any. Bad credit will not be disqualified for getting small business loan no matter whatever the amount might be. However you will have to stake large collateral.

Lender looks for 8 "C"s

Lenders look for credit, capacity, capital, collateral, conditions, cash flow, commitment and character. Here are some basic points that an ideal candidate is expected to provide as evidence.

You have adequate assets, financial reserves as well as personal security to tolerate business fluctuations

If your business exists then you will need to show proper cash flow and ample funds to pay off your loan

If you are setting up a new business then you will have to provide evidence of profitable and successful track record in an identical business venture

Business plan

Business plan is significant to get an approval for small business loan. It must be submitted with the loan application. This provides the lender a detailed picture of your business. Everything about your business including - mission, goals, marketing strategies, and operating procedures has to be explained.

Your lender will be impressed because you have displayed a well-researched plan that meets the 8 "C"s. Supporting documents like accounting records, marketing information and bank statements will reinforce this display.

Balanced ratios

Lenders desire to find out if your business is apt to repay the loan and simultaneously maintain its financially sound operation. For this they check your business ratios. The formula is - total liabilities total capital amount. The ratio will help them to determine if your company has adequate equity for maintaining the debts.