Proper Projections for Start Up Loans

Start up business loans are the most difficult loan types to get funded. If you are able to get a lender interested in your business don’t make the mistake of being too conservative on your projections. If you provide a lender projections that are very conservative you will hurt your chances for a loan. It isn’t good for a lender to give you less money than you need to get the business going. If you don’t get enough money you could default on the loan which is worse for you and the lender. Here is what you need to keep in mind when you submit your projections.

  • Typically you will only have one shot at submitting your projections to a lender. Make sure you give the lender a picture of what you really expect.
  • Do not give them the most conservative projection possible. The bank is determining how much money to give you and how to structure the risk based on your projections. If you give them the wrong picture you will get the wrong loan. This is bad for you and the lender.
  • The lender is not going to hold you to the projections you submit. In fact, most of the time they will water down your projections and create a “bankers expected projection.” It will be this projection that is reviewed annually.

Give yourself a fair shot at getting the money you need by giving an honest projection to your lender. We are not suggesting that you over inflate your projection. Make it reasonable. Include with your projection a summary of your assumptions to support the projections you prepared. Carefully prepared projections will go a long ways in getting the right start up loan for your business.

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