How Do You Borrow Money?


Quick Answer

You need to prove ability to repay and have a good credit score in order to be able to borrow money, states the Small Business Administration. Lenders are also likely to require collateral before extending a loan for your business.

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How Do You Borrow Money?
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Full Answer

To prove that you can repay the loan you need to prepare a cash flow analysis and business plan. This should also include a repayment plan for the loan. To borrow funds you need to convince the lender of the soundness of the business plan, the cash flow, your ability to repay the loan, and your intention to repay the loan. Lenders are more likely to lend money if you are passionate about the business plan. You should also offer the lenders you are approaching sufficient collateral against the loan, says the Small Business Administration. Collateral can include a house or other real estate, a car, jewels, bonds, and shares.

Lenders typically assess the management commitment to the business as well as the ability of the managers and owners to make the business a success. Lenders are more likely to let you borrow needed funds for your business if you can convince them of the ability of the business to repay the loan.

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