Regardless of the type and size of value-added business, you will need money to operate it. If you are starting a new business, you will need money for business start-up. If you are buying an existing business, you will need money to purchase the business. If you are expanding your business, you will need money for the expansion. These financial needs should be outlined in your business plan.

The first source of money is equity funds provided by the owners of the business. However, equity provided by owners is usually not sufficient to cover all of the financial needs of the business. So money is often borrowed from a financial lender.

Whether you are borrowing a few thousand dollars for a direct marketing business or millions of dollars for an agricultural processing business, knowing how to approach lenders, present your business plan and negotiate loan terms is important for the success of your business.

Obtaining a Business Loan provides you with insight into selecting the right lender, examining the loan request from the lender’s perspective and identifying reasons credit lines get in trouble after the loan is made. Also, knowing How to Prepare a Loan Package is important for obtaining the type and amount of funds that you need.

For more information on this topic, see the links listed below of articles posted on related Web sites.

Borrowing Money

• Borrowing Money - Small Business Administration -- Borrowing money is one of the most common sources of funding for a small business, but obtaining a loan isn't always easy.
• Finding Capital – Business.gov -- Raising debt capital is the most basic of all business activities, but it may not be easy; in fact, it is often a complex and frustrating process.
  Banking and Financing FAQ's – Lawyers.com – Questions and answers about banking and financing.
• The Lowdown on Business Loans - NOLO Law for All -- If you're seeking a loan for your business, make sure you understand the basics.
• A Business Plan is Important when Working with a Lender – Direct Marketing and Tourism Handbook, University of Arizona – When you borrow money your banker becomes a partner in your business.

Types of Loans

• Working Capital Lines of Credit – CCH Business Owner’s Toolkit -- A line of credit sets a maximum amount of funds available from the bank, to be used when needed, for the ongoing working capital or other cash needs of a business.
• Letters of Credit – CCH Business Owner’s Toolkit -- Letters of credit are not the most common means of small business financing, but they are an important financing tool for companies that engage in international trade.
• Understanding Promissory Notes - NOLO Law for All -- Whether take out a loan from a bank or borrow money from someone you know, you should sign a promissory note.
• Asset-Based Loans - Entrepreneur.com -- Use your assets—like accounts receivable and inventory—to help you land funding.
• Bank-Term Loans - Entrepreneur.com -- Go with old reliable and get a business loan from the bank.
• Microloans - Entrepreneur.com -- When you need only a little cash to grow, it's time to check into microloans.
• Private Loan Guarantees - Entrepreneur.com -- You're early stage, the bank is ignoring your pleas--what do you do? Find an investor to guarantee your loan.
• Royalty Financing - Entrepreneur.com -- Got a product that will bring in the bucks? Use it to get a loan based on your future sales.
• SBA-Guaranteed Loans - Entrepreneur.com -- The SBA's got your back. With an SBA-guaranteed loan, they'll guarantee as much as 80 percent of the principle.
• 504 Loans - Entrepreneur.com -- If you're buying a fixed-asset like land, buildings or long-term equipment, look into a 504 loan.
• The 504 Loan: Intelligent Financing for the 90s – MoreBusiness.com -- Small business owners looking to further the growth of their companies by purchasing space and equipment may be eligible for a 504 loan.

Loan Terms

• Interpretation and Use of the Amortization Table – Kansas State University Extension. 
• Long-term Loan Repayments Methods – Colorado State University Extension -- Long-term loans can be repaid in a series of annual, semi-annual or monthly payments.
• Calculating Loan Interest – Colorado State University Extension -- The annual percentage rate provides a common basis to compare interest charges associated with the loan. The contractual rate is the interest rate actually stated on the loan contract.
• The Burden of Borrowing – Entrepreneur.com -- Your growing company could be hindered by hidden loan costs if you don't look ahead.

Applying for a Loan

• Applying for a Loan - Small Business Administration -- Make your best presentation in the initial loan proposal and application; you may not get a second opportunity.
• Sample Bank Loan Application and Review Forms – CCH Business Owner’s Toolkit -- By linking these two documents, we can help you understand what information the bank wants from you as well as how the bank will use that information in making its decision on your loan application.
• Preparing and Presenting a Loan Proposal - Small Business Administration -- Once you have a written business plan, you are now ready to approach the money markets to try to finance your business.
• Loan Proposal – Small Business Notes -- Approval of your loan request depends on how well you present yourself, your business, and your financial needs to a lender.
• Loan Package Checklist - Small Business Administration -- Whether you are applying for a micro-loan, SBA guaranteed loan or a traditional bank loan, similar information is required to complete a loan package.
• Getting a Business Loan: Getting the Lender to Say "Yes" - NOLO Law for All -- When trying to get a business loan, it helps to view things from the lender's perspective.
  

Lender Relations

• Working Together with Your Farm Lenders – University of Alaska – Farmers seeking financing from a lender have most successful when they look at it as a joint effort.
• What Banks Look For - CCH Business Owners Toolkit -- Remember, the guy who writes the bank's advertisements is not the same guy who approves your loan.
• Learning to Live with (or Without) Your Banker – Inc.com -- This article takes the viewpoint that because bankers are really vendors of a sort, small businesses have the right to demand certain levels of service and value added.
• Choosing a Bank for Your Business – Small Business Notes -- How should a small business owner choose a bank or financial institution?
• Banking Relationships - Entrepreneur.com – Series of articles.

Credit Issues

• Rebuilt Your Credit – Just the FAQs – NOLO Law for All -- Improve a poor credit rating so your next credit check is better.
• Debt Collections – NOLO Law for All -- If you are unable to pay your bills, a call from a debt collector is inevitable.
• Strategies for Repaying Debt – NOLO Law for All -- By prioritizing your debts, understanding some general principles about working with creditors, and learning strategies to deal with different types of debts, you can begin to reduce your debt load.