For those wishing to start a bakery, securing a loan is almost always required. There is high start-up costs associated with bakeries which can make it difficult for the average entrepreneur to afford. Unfortunately, banks aren’t always eager to finance start-ups, but that doesn’t mean securing a business loan is impossible. Other financial institutions such as credit unions are also available for business loans. To have the best chance at securing a bank loan provide the following:
A clear explanation of why you want the loan, and how much you want it for
Most start-up owners don't truly know how much money they will really need from the bank. Unfortunately, this makes a banker believe that the entrepreneur has not done the research needed to prove their business' financial viability. Have a detailed reason for why you need the money, and what exactly you intend to do with the money.
The best credit score possible
If you don't have a good credit score, a bank will not give your bakery a business loan. Your credit score lets a bank know your financial worthiness, and if your score is low, they will assume that you cannot make payments on time or that you may be on the brink of declaring bankruptcy. Take the time to make sure you have the best credit score and history possible before seeing a lender.
A complete business plan
A well-written and well-researched business plan will always let lenders know that you are serious about your bakery. Detailed projection sheets and analysis of the local area’s economy and competition will also help convince lenders that you have done the research to make your bakery a worthwhile investment. Your bakery's business plan needs to prove that your bakery will succeed, and if it does so, a bank is usually more than willing to give you a loan.
Receiving a bank loan for your bakery may prove to be difficult. Because of the current state of the economy, banks are easily deterred by imperfect credit scores or low down payments so don't quit trying the first time your bakery's business loan is denied by one lender. Simply find the next lender who is willing to hear what you have to offer. Just because one lender denied you, doesn’t mean the next one will too.