Advantage Of Accepting Debit Card Payments

accpeting debit credit card payments

If you have a merchant account for your business and already accept credit cards, then you don’t have to do anything much to accept the debit cards as well.

The same terminal and machine that you use to swipe a credit card can be used for debit cards as well. Debit cards are popular methods of payment both the consumer and the business.

The business stands to profit from the use of a debit card because the payment processing cost is less.

Whereas credit card providers also take a percentage of the transaction, debit card charges usually only include fixed standard charges for the transaction. One of the main advantage of using a debit card is that as a business you will get the payment faster.

Unlike a credit card, when a consumer uses a debit card the money is almost instantaneously withdrawn from his bank account.

The transaction rates for pin-based debit transactions are even lower than credit card rates. PIN based transactions are made using the keypad terminal which allows the consumer to type in their debit card pin. This adds an extra layer of security against fraud. Almost all of merchant account offer a debit card processing.

Debit card payments is now even possible online for most of the online payment processors.

Once you have a merchant account, you’re likely to be offered the option of accepting debit cards for business payment on its own. All you need to buy is a pin pad which costs about $60 and connect it to your terminal.

How To Accept Online Payments For Sales

how to accept online payments

If you sell your products online through a shopping cart or an online store, you will need a merchant account with a bank to be able to accept credit card payments.

Other options to accept payments online on the website also include internet banking. If you intend using your independent merchant account to process such payments, you’ll need to apply for one such account have the facility of money transfer through credit cards and netbanking approved.

It is common for banks to charge a larger transaction fee for transaction online because they’re supposed to be a riskier since there is no physical presentation of the credit card.

However, there are now many safeguards in place such as issuing of a PIN sent directly to the mobile of the user before the transaction can be authorized and programs like MasterCard/VISA secure which require registration of the credit card and entry of a special password to verify the transaction.

The service provider may also charge monthly statement and transaction fees on each of your purchase.

When you apply unit be asked to estimate the amount of average sales and order size as well as the monthly average sale volume for your online store. You may be asked to keep a percentage of the amount in your account to cover fraud transactions and charge backs.

Sometimes chargebacks occur for credit card transactions online. Chargebacks are sale reversal by the credit card companies when the customer disputes the charge.

The charge backs can either be a result of a fraud or otherwise. To help reduce charge backs you should let your customers know exactly what will appear on their credit card bill so as to not mistake the transaction as something they did not order. If you’re not sure that any transaction is legitimate you should call the credit card company or bank before finalizing the sale.

Another interesting option of accepting payments online is without opening your own merchant account.

Services like PayPal process credit card payments on your behalf. In return for a percentage of the cost of the transaction. This percentage amount is fairly reasonable and may only be slightly higher than in merchant account if at all. You only have to pay when you make a sale and there is not monthly fee involved.

Depending upon the amount your merchant account provider charges as compared to online providers such as PayPal, the sales volume of your business, you can choose one of the either options. One reason in favor of using a merchant account rather than PayPal is that it gives you is this a more serious business image online. Almost anybody can use PayPal whereas having your own merchant account is more professional and businesslike.

Using A Secured Website For Processing Online Payments

secure website and online payments for business

When doing business online especially when accepting payments online date take care to implement proper security measures to ensure that the information about your consumers and their financial details is safe from hackers.

Selling online through online stores is the great opportunity thanks to which several small businesses can expand beyond the physical limitations of a physical store. Even small businesses can reach far out not ingest the country but also internationally.

However, consumers only feel safe in buying online from a store if the when they feel comfortable about the security of their credit card details and any other sensitive personal or financial information they need to input.

Customers are told to watch out for features like a website protected by SSL certificate which is a security clearance before feeding in their credit card details.

If you cannot assure your consumer of the security measure your website and online store takes to undertake safeguarding their personal information, they will be hesitant to buy.

Consumers are well aware of the threat of identity theft and credit card fraud. These incidents are even more rampant on the Internet. This is where the secure sockets layer, SSL certificate comes in handy. The SSL technology encrypts the customer payment information on the Internet as it travels to you which prevents the credit card data and other sensitive information from hackers.

Having a security enabled website also tells the customers that you are who you say you are. In order to get an SSL certificate for your website you need to apply to a certified authority such as VeriSign. In order to do so you will have to provide a business credentials as well as make a payment of $200-$400 per year for the SSL certificate. Having such a certificate puts more faith in the consumer regarding your identity and the credibility of your business.

If you happen to store your customers personal details and data in your database such as credit card numbers, you will need additional protection such as a firewall to protect this information. This is a highly professional job and you are best off consulting a web hosting company or an Internet security expert firm to implement these security features for your website, server and database.

Why A Business Needs To Accept Credit Card Payments

accepting credit card payments

Today a business that wants to keep up has no choice but to offer credit cards as a method of payment.

It makes sense for any business to accept credit cards as form of payment. In today’s date and time, customers do not prefer to carry cash and prefer to make payments through cashless means such as debit cards and credit cards.

Consumers find payment by credit card’s most convenient not only because it is cashless but also because it gives them a certain grace period to pay what they charge. Which means they can buy something today that they can afford to pay for only later. That is the benefit of using credit and also its downfall.

Research and study shows that a consumer spends more easily when using a credit card. Credit cards increase the probability, speed and size of customer purchases. Also, customers do not prefer to carry cash when traveling long distance. Another reason why customers choose to pay by credit card is because it makes returns and exchanges with the merchandiser more easy.

Accepting credit cards has lots of advantages for business. It enables the business to increase the size of the average orders and make the customer buy multiple items when they do not have ready cash for it.

Accepting credit cards is preferable to accepting checks because you receive the money within a few days typically 3 to 5 working days as opposed to waiting for a check to clear. Finally, credit cards are safer and guarantee payment to you without the risk involved in accepting bad checks.

If your business is a sizable business, you may consider issuing a private label credit card with your companies name. Since you already accept major credit cards such as MasterCard, Visa, Americans express and discover, your private label credit card program will help the business focus on who the consumers are.

You would be able to gather data regarding customer purchases, buying patterns, income and demographics. Small businesses can save money by using an outside administrator that specializes in private label credit cards. Your credit card is not much different and you will still be using providers such as, Visa and American Express. A large number of banks have entered this arena and you can ask your banker if they offer such programs.

Get recommendations of private label credit card administration company if your bank doesn’t provide this service.

Administration companies can do everything from setting up operations to developing specialized marketing program, designing the credit card, training employee’s and developing lists of potential customers.

Before choosing an administration company you can talk to the business owners who use private-label credit cards to see if they are happy with the particular service.

Weigh the cost of running your own credit card against the benefit that you’re going to get from it. Usually larger corporations benefit from issuing their own private label credit cards, rewards cards etc.

Once you have been approved for a merchant account, make the best use of it to the maximum advantage of your business. Credit card companies and bank industries hold several seminars and user conferences which cover the latest in the industry, from fraud detection techniques and other helpful subjects that can make your business more secure, grow and become more profitable.

You can also keep track of various promotions and discounts run by your bank and your credit card companies. Keep in touch with the sales representative of the credit card company to be aware of the latest rates and deals.

For example, several banks and credit card companies offer interest free installment payment of a large purchase if the customer happens to be using the credit card issued by that particular bank or a particular credit card company.

Once you have a merchant account approved by the bank and are technically ready to accept credit card and debit card transactions, buying the right equipment is not so difficult.

Although the simplest form of processing a credit card payment involves getting a phone line and a card imprinter, you are advised to get the electronic credit card machine. Almost no one uses the credit card imprinter now even though it costs less than $50.

Buy A Credit Card Processing Machine

Electronic terminals and machines processes credit cards more securely and ensures that you get a better discount rate as well as you get the money in your account faster. 

Just as importantly, having an electronic credit card processing machine means that the credit card can be approved or denied instantly. With a credit card imprinter you have to present the receipts and slips to the bank which could mean that more payments could be denied due to various reasons. It is also a more secure way of accepting credit card payments and prevents credit card fraud more effectively.

Another advantage of using a digital credit card processing machine is you can use cash registers in tandem with the checkout terminal, maintaining a more streamlined account of the sales. 


How To Accept Checks For Payments And Avoid Bad Cheques

cheque-payments

How to Safe Guard Your Business Against The Risks Of Accepting Checks As Payment

Accepting checks for payment can be tedious process. Checks that are not good and bounce can be a blow to the profit for the business.

However, the business does need to accept checks especially when dealing with other businesses and suppliers. While it can be more difficult to handle than cash and credit cards, here are some ways of making the check acceptance policy that safeguards your business against some of the risks.

Get familiar with the laws and regulations

The laws and regulations regarding cashing checks can differ greatly among different states and even different areas in the same state.

You can begin by contacting your local police department and familiarizing yourself with the rules and regulations that govern checks in your state. Some of the police departments have seminars instructing businesses on how to set up proper check cashing policies.

While the laws may differ in different areas, some of the basic rules that you should always follow before accepting the checks can go a long way in minimizing the risk.

Ask for Identity Verification

Always asks to see some form of identification from the consumer such as a drivers license. Any other valid and legitimate photo identity card will do as well. Compare the physical characteristics of the person presenting the check against the photograph in the identity card. If you have any doubt you can ask the consumer to write his signature on a separate piece of paper and match it with the signature present on the check.

Many people using false identities may make a mistake at this point time.

Ask for the customers home and work telephone numbers in case the check happens to bounce. Do not cash the road checks, checks for more than the amount of purchase or third-party checks.

Watch out for telltale signs of forgery

Equipment like publishing software, laser printers and scanners which are readily available to any consumer have made it easier to alter, forge and duplicate checks.

Examine the document very carefully and look out for smudge marks that could indicate that it was illegally made.

Watch out for smooth edges on the check which is another sign that the check could help immediately. Almost all checks are drawn from a checkbook and have at least one perforated edge that was attached to the checkbook. Smudged handwriting or signs that the handwriting has been erased are other warning signs that will point to an illegal check.

Be cautious of new bank accounts

The majority of bad checks are written on new bank accounts. Many businesses refuse to accept a check that does not have the customers name preprinted on it. If the check is written on a brand-new account say with a check number below 200, protect your business by asking to see 2 forms of identification.

Establish a waiting period for the funds

Merchants can easily face a loss if the consumer purchases products by check and returns the merchandise the next day for cashback refund. When the bad checks bounce at the bank the businesses left hanging high and dry. In order to prevent this from happening, many businesses require a 5 to 7 business days to allow the checks to clear before cash refunds are paid.

avoid bad check payments

Safeguard your business by using electronic check verification machines and services

If you process a large number of checks, you can benefit from using the services of a check verification company. Check verification companies have a database of people who have a history of writing bad checks. What you are required to do is use check reader and scanner at the checkout counter. If the check matches the name in the company’s database the check is refused. You will need to pay a monthly fee to use the services. The amount will depend upon the number of transactions you hope to process.

Using a check reader can make the process of check verification fast and efficient. Check verification companies can verify and deliver verification results within seconds which is just as fast or even faster than the credit card payment verification.

Apart from verifying checks, check verification companies also offer check guarantee service. This guarantee covers the business in case the merchant happens to accept a bad check based on the approval of a check verification company. The business gets reimbursed for the value of the check. Getting a control on the check verifying process can be important if you hope to accept a lot of checks in your business. One bad chick can signify the profit for the entire business day or a couple of business days for a small business.

Another option for verifying checks before accepting his using an electronic check conversion/acceptance system. This system allows the merchant to accept checks as easily and safely as credit cards. When a customer makes a payment to the check, the paper check is run through a check reader converting it into an electronic item much like the credit card terminal does when the card is swiped. And deposited into the merchants accounts usually within once the transaction is approved funds electronically debited from the customer’s account 24 to 48 hours. This technology also allows the business to process checks over the phone or the Internet.

A good practice is to educate your employees and make sure they understand the procedure to follow when it comes to accepting checks. Be sure to post your check acceptance policy prominently where the customers can see it. Specify the charges for bounced checks, forms of added dictation required and what type of checks you will and will not accept. Posting signs will prevent disgruntled customers who have waited in line only to find at the checkout counter that you do not accept a check.

Require your employees to sign his initials of the checks that he accepts. No one wants to be the one who took a bad check because of carelessness. This will make your employees more careful about following proper procedure when accepting checks.

What To Do When You Get A Bad Cheque

what to do with a bad cheque payment

In most cases after the check bounces the bank will allow you another attempt to deposit. After that the responsibility for collecting the money is yours.

As already mentioned before, you should take down the contact number of the consumer, home and office phone number and accept his check. If the check happens to bounce, contact the customer either by phone or e-mail.

Once again consult your local police department on the proper procedure to follow. Some states may require that a registered letter be sent and a specific amount of time elapsed before further action can be taken.

Try to handle the situation with a balanced mind. Most incidents of checks bouncing our accidental mistakes. In these circumstances not much will be gained by becoming hostile and angry. If you manage to get in touch with the consumer explain the situation and ask for payment immediately costs reimbursement of any bank charges that you have incurred.

If the person refuses to pay or you cannot contact him, there are other kinds of actions open to you.

The easiest thing to do is to hold the check for a short time after 6 months from the date that it was written and deposit it as soon as there are funds in the account.

Stay in touch with the bank and asked them to notify you when there are sufficient funds available in the account for you to be able to cash your check. The banks will not allow the check deposited the 1st time. So you have to make the 2nd time good. Keep calling the debtors back periodically and as soon as there are funds, cash a check immediately.

Another option is taking legal recourse. Hopefully through your checked exceptions policy you will have collected identification information about the consumer when accepting a check written by him. This will allow you to complete proper paperwork. However, the hassle and expense of finding a lawyer filing this complaint and suing the consumer in a court may be not worth your time and expense. It may even cost you more than the amount of the check.

In these circumstances you might consider using a collection agency to recover the debt.

How to Shape a Good Credit and Payment Policy

To determine what kind of a payment and credit policy you want to establish for your business, start by taking a look at your competition.

Whether you like it or not, you might have to match the terms that your competition offers so that they do not have an advantage over you. However, sometimes when you feel that you have something unique to offer, you can offer your own credit terms. Just like any other aspect of the business, if you feel that you’re in a position to dictate your own terms, do so.

The whole point of creating a payment and credit policy is to make it easier for the consumers to buy from you while safeguarding the business interests.

Some inexperienced entrepreneurs are tempted to take the business away from competitors by offering lower prices and longer payment terms.

You need to be very careful when handling credit with your customers.

You want to attract customers by giving them good credit terms but you only want to attract customers who are creditworthy and reliable.

You should be aware of the fact that troubled businesses switch from one supplier to another whenever they reach their credit limit with one. Others can be outright cons and frauds that take advantage of new and inexperienced entrepreneurs.

A good idea to establish a credit policy is to sit down and discuss with your accountant, key members of the business. Keep in mind the safety factors. Accordingly you can create a liberal credit policy or a conservative one. A conservative credit policy would limit the customers that it offers credit to. The customer will need to provide proof of hi creditworthiness and the references before they can qualify.

It is common for businesses to start a customer initially on a cash on Delivery Basis. This way he can establish his credibility and willingness to pay on time.

In order to develop a credit policy, you will need to take a good look at your business as well. How large is your business, what is the trend in the industry, what is the size and experience of your staff, your profit margin and your tolerance for risk. You credit policy will also depend on the customer’s reputation too. For certain industries, it is well advised to use a conservative policy.

The size of your business staff and the capability will also make a difference. If you adopt a liberal credit policy there has to be somebody who will need to handle collection calls and recover payment. Liberal credit policies may require you to be aggressive when customers do not pay on time. They may require you to use other resources, which may cost you money as well. Recovering bad debts is done usually by using an attorney or a collection agency. Both of these cost money.

Figure all these factors in and you will know what you want for your business. There is also no harm in taking a conservative approach and gradually loosening up as your business grows and becomes more secure.

Why You Need A Clear Credit Policy

In today’s date, there are so many different kinds of payments business must accept if it wants to offer convenient payment modes to the customers and suppliers. While it is common for suppliers to work on a line of credit for the business, even consumer sales are dependent on any form of payments except than just cash. Whether you are a business-to-business enterprise for a consumer-oriented business, the payment options can include credit cards, taking checks, debit cards, extending credit, off in installments as a.

Creating a firm payment policy as well as the credit policy for your suppliers and consumers is important. This aspect is often forgotten in the excitement of starting a new business and making sales.

Having a clear-cut payment policy establishes a uniform basis for people to be able to pay you and also tells your employees how to handle billing and payment. Deciding beforehand what forms of payment you will accept, and what methods you would use to ensure women is an important aspect in ensuring the success of any small business.

The business needs to be clear about its credit policy. Most consumer-based businesses do not extend credit. All customers need to pay outright either in cash or use the credit of their own such as credit card. Certain stores have tie ups with certain banks for providing payments on installments if the customer happens to be using their credit card.

Buying now and paying later after a few months was also a popular credit feature that is found with many stores.

However, it is common for businesses to work with the suppliers and other business to business sales on a credit basis. Credit can make or break a small business. A too lenient credit policy can mean that you might spend a lot of time and effort in trying to collect payments. You may also muster up more bad debts. But a carefully designed credit policy does not only boost your business but also enhances its portability and cash flow.

Many small businesses when starting out or reluctant to establish a firm for the policy for the fear of losing their customers.

You not have much fear about this as long as you’re confident about your business. A strong and consistent credit policy not only strengthens the finances of the company but also creates a more professional image in your customer’s eyes. The more clear you are about to credit policy, the more clear to people you are dealing with about the payment terms. It is best not to be ambiguous about financial matters when it comes to running a business.

A creatively and effectively designed credit policy can do the following things.

  • Avoid both bad debts and bad feelings.
  • Standardizes payment procedures and provides employees with clear and accurate directions as to how to handle payment.
  • Gives a message to everybody that the company is serious about managing credit.
  • Lets you decide how the credit is working out towards the overall success of marketing and sales effort of the business.

Goals Of A Business Credit Policy

Limiting credit risk and Evaluating a businesses creditworthiness.

A customer credit policy seeks to obtain two goals for the business. First of all, it limits the risk and liability for the business and secondly it evaluates the creditworthiness and the risk that the company or the consumers before extending credit.

One of the cardinal rules of extending credit is that no matter how creditworthy and customer is, never extend credit beyond your profit margin. For example if your markup for a service is hundred percent, you can safely risk that amount without jeopardizing their companies cash flow. At least this way you are not undergoing a loss. Even if you do not get paid your expenses are covered.

The second aspect is evaluating the customers credit worthiness accurately.

In order to do so, many businesses use a credit application asking for details about the business that wants credit. The information given helps them learn crucial facts that a credit approval decision hinges upon.

Ask the company to fill out a comprehensive credit application that asked for the following details.

  • Name of the business, address, phone number and fax number.
  • Names, addresses and social security numbers of the principal owners of the company.
  • Type of business such as corporation, partnership, or sole proprietorship.
  • Industry
  • Number of employees
  • Bank references
  • Business/personal bankruptcy history
  • Any other name under which the business operates
  • A personal guarantee from the business owners to pay you if there operation is unable to.

The credit application should have details about your credit terms such as what kind of interest you will charge if the customer is with the payment. Indicate if a customer is responsible for paying any attorney fees or collection cost in case a legal dispute arises due to non-payment to any other issue. Specify which areas of jurisdiction will settle such a lawsuit. Have your credit application form reviewed by an attorney who specializes in creditor rights to make sure it is in line and accordance with your state regulations.

Once you have the details from the customer you need to investigate this information. There are three main sources that can be easily accessed to learn about the credit worthiness of the company and its previous record as far as payment history and credit is concerned. You can ask for the information directly from credit reporting companies. Some company’s payment history will also be available through DNB. Because credit agencies reporting can be unreliable and maybe even difficult to get, you can gather information about the business and the industry about their reputation as paymasters. Most industries have associations that trade credit information about business that are members.

Another source to find out some information about the business is checking on the website of the better business bureau. This however, will not help you gather much information about their credit worthiness but we give you an inkling as to the number of complaints they have had about payments. You would be able to see if the complaints were aptly resolved by the business. The BBB is certain states also helps arbitrate payment disputes between businesses, specially when the businesses are a BBB accredited business.

Try to get references and ask customers how prompt and reliable the company is with the payments.

One more factor that will help you decide the amount of credit to extend the company is the volume of credit that they want. The larger credit they want the more the risk to your business. If risk is not something a business can handle them you have to either refuse or ask for part payment.

Finally, use your intuition and good sense. If you’re inexperienced in this aspect of the business; take the assistance of somebody who is. You can consult your business accountant and your business attorney to help you determine the credit policy for your customers.

Applying for a Business Loan – How To Write The Loan Application

how to apply for a business loan

How to write the loan application when applying for a business loan.

You should pay special attention to writing your loan application because it is going to be the foremost instrumental in getting you approved for the business loan from the lender.

You should consider your loan application as an advertisement and promotion for your business to the business lender. Think of it as publishing an ad that your lender is going to read, and approve or disapprove of your business loan based on information in it.

Your loan application should clearly state the long-term profit-making potential of your business that tells the lender that you will be able to pay back the money that you borrow as a loan.

Your application should convince the lender of your managerial ability and the fruitfulness of striking a long-term and profit-making business partnership with you and your enterprise.

Banks and commercial lending institutions need evidence of security, stability and business potential before the make the business loan. You can ensure that your application speaks about your business in such a form by staying both realistic and optimistic in stating the facts.

You should always stick to stating the facts on your loan application. This is even true of for a person who is just starting up with a business venture. If you anticipate the sales between $50,000 to hundred thousand dollars, base year income projection on an average figure of $75,000.

It is also very important to make sure that your business loan application is complete. When some information is missing from your many bankers will assume that either the information is being hidden on purpose application, or the business owner doesn’t know his own business well enough to put the required information together.

There are 12 separate items that are usually included in every business loan application. The importance and length that each section takes will depend upon the kind of business you are running, your industry, and the amount that you are borrowing.

how to fill out application for a business loan

Sections Of a Business Loan Application

  1. Cover sheet.
  2. Cover letter.
  3. Table of contents.
  4. Amount and use of loan.
  5. History and description of business.
  6. Functions and background of your management team.
  7. Market information on your product and service.
  8. Financial history and current status.
  9. Financial projections to demonstrate that the loan will be re-paid.
  10. A list of possible collateral.
  11. Personal financial statements.
  12. Additional documents to support the projection.

Coversheet

Think of this as the title of your business loan application. All it needs to contain is your name, name of the business and the name of the lending institution that you’re submitting the business to. It should also include your business cell phone number and the date on which the application is being submitted.

Cover letter

The cover letter is a personal letter to the bank asking them to consider your application for business loan. This letter usually should not exceed one page and also describes your business in general such as whether it is a partnership or corporation, in manufacturing, distributing or retail business and what type of goods or services you provide. You should include just a few lines in order to give an idea of what your business plan is.

Table of Contents

This section is a summary of all topics contained within the business loans application according to page numbers, so that the banker can easily find the information chronologically or otherwise listed, as well as the documents included.

Amount and Use of Business Loan

As we have said, business loan approval also depends upon the purpose for which it is being sought. The tenure of the loan usually depends upon this fact. For example if the loan is for the purchase of a new piece of machinery, it could be up to 7 to 10 years. If it is for the purchase of real estate, the loan could extend as much as 20 years. If it is for meeting business expense, then it can be as short as 4 months.

Whenever you seek a business loan for a particular purpose, show the contract price, cost of freight and installation and all other amounts that will contribute to the amount you require. In the end you should clearly state the amount of money you will be providing from your own resources and the balance you are seeking to borrow.

History and Description of Your Business

Describe your business in greater detail in the section. You spoke about your business briefly in the cover letter now speak at length about the conformity of business, why the new monetary influx is going to be profitable etc. Speak about the future plans of the business. It is essential to stick to the facts and only state those matters that can be justified and proved with documents and statistics.

Management Team

The lender will also like to know about the people at the helm of the business and in charge of running it. Your managerial team is likely to be your most valuable asset and pivotal in the success of the business. It could be several employees in key positions, it could be just you or one more person or it could even be other consultants such as accountants, bankers and lawyers. In one or 2 pages you should list each person’s name and responsibility. Where appropriate and if to the betterment of your application, you can describe the background of a person in an important position and why he is ideally suited for the job.

Market Information

In this section you should give a complete description of your product line of service as well as the target market. Give details about how you are going to target your market and any future clients you already have for introducing new products and services.

Financial History

Most bankers want to see balance sheet. and the income and profit and loss statements. If you are a business startup you have to use projections which the bank will compare to the norms in your industry.

Financial Projections

This section includes 3 sets of documents, a projected income statement, balance sheet and cash flow statement. These statements tells the bank how the business intends to use the loaf and how it can generate short sale profits to pay off the loan. In most circumstances you will need the assistance of your business accountant to prepare these documents.

Collateral

In most circumstances you will have to use the collateral as security in order to get a business loan. This collateral can include your personal assets such as your stock, including loan on your home or a personal loan. The collateral used can also be that of the business such as the inventory, accounts receivable, business machinery and equipment etc.

As a business startup you are going to find specially difficult to get an unsecured loan without using any collateral security. Almost all lending institutions want a secondary method of payment to recover the loan in case the business owner happens to the default. Each collateral you are going to use should be described in detail, with a fair market value.

Personal Financial Statements

As a startup a bank or lending institution will want to know about your personal net worth. They will also want to know what personal guarantee you can offer in order to secure the business loan from them. In order for them to be able to gauge your personal net worth, they will want to see your tax return and balance sheet. Many banks offer a preprinted forms that make listing these figures relatively easy.

Additional Documents

This section should include all of the documents that can further enhance your chances of qualifying for a business loan. For example if you have a new sales contract on a piece of equipment or lease on any location that has the potential of growing your business revenue, you can include it in this section.

In case you have plans to introduce a new product or service you can include a product brochure and additional market-research information as well. This section can be especially important to new business startups who do not have a track record. You can even include assurance and feedback from one of your major customers to give the bankers an idea of the value of your business and it’s potential for growth.