Business owners in Illinois may find that in order to take their enterprises to the next level, they will need to secure financing. With a small business loan, they can make necessary repairs or create more of their products to keep up with demand. To improve their chances of getting the financing their business needs, there are certain steps business owners can take.
It is important to know exactly how much of a loan the business requires. It needs to be large enough to address the needs of the business but not so big that it will be difficult to pay back the lender.
To get a clear idea of how much money they should borrow, entrepreneurs can calculate their debt-service coverage ratio. This calculation will use the current cash flow of the business to determine whether the business owner will be able to make the weekly or monthly loan payments. The goal is to determine a loan amount for which repayments will not be a financial hardship.
Another useful financial tool is the loan-performance analysis. It allows entrepreneurs to determine how much their revenue would have to increase in order to make the loan a wise investment. An entrepreneur can avoid overextending his or her finances if he or she is aware of how much money has to be generated to repay the loan and satisfy current obligations.
Once someone has determined the loan amount, he or she needs to find the right lender. Entrepreneurs have plenty of choices, including traditional banks, the Small Business Administration and online lenders.
An attorney who practices business law may assist clients with business formation and planning. A lawyer may help startup owners create the right type of business entity and obtain the necessary business licenses to operate. Legal guidance may be provided regarding business mergers, regulatory compliance and estate purchases.