At one time or another, you will probably find that you need a business loan, either to get your business up and running or to sustain its ongoing growth. It only makes sense that lenders want to minimize their risk, so securing business loans requires a good bit of preparation. You want to make sure that you can convince the lender that your business is credible and that you can be counted upon for repayment.

Admittedly, the process for acquiring a business loan is generally more complex than getting a personal loan, but it need not be overwhelming. The key is to have a clear, systematic approach that covers all of the bases. The three steps that will get you headed in the right direction are plan, identify references and determine needs. Let's take a more detailed look at each of these three steps.

Step One--Plan

It may be hard to believe, but some entrepreneurs think that because they have a good idea, they don't need to plan for the success of their business. There is a kind of magical thinking that leads these idealists to believe that somehow or another the business will just take care of itself once they get started. They do not plan.

Lenders, however, will want more than your enthusiasm to convince them that your idea is a good one. They will want a business plan and maybe a plan for marketing. If you don't have a well-thought out business plan, lenders may not be convinced that your business is worth the risk.

Step Two--Identify References

Traditionally, we think of references as being people who can speak positively in our behalf. When it comes to building business credit, these references need to come from those with whom you have conducted business. For example, you want to establish a good relationship with the bank who holds your business account and with two or three vendors with whom you have conducted business. These can then serve as references when you apply for your loan.

Step Three--Determine Needs

Before you approach the lender, you need to make sure you can thoroughly answer the questions of why and how. Why do you need the loan? The more details you can provide, the more convincing you will be. How much do you need? Make sure the amount you are requesting is reasonable and clearly relates to your statement about why you need it. You may also want to offer suggestions about how you will repay the loan. Don't wait for the lender to ask. Be proactive.

Lenders want to see evidence that your business is viable and credible, so the more thorough you can be in your preparations, the more likely you will succeed. A little prep time spent upfront can make the difference in whether or not you get the loan.