Make sure we really need a loan
The first tip is to make sure we are really going to need extra money for our business, and that the only way to achieve this is through external financing.

We may need money to increase our working capital to acquire new machine, to open new premises in order to pay off other debts, etc..

We must bear in mind that a loan involves a great responsibility, so before you request, we must ensure that we will be able to pay in due time.

To ensure that we will be able to repay the debt
The second tip is to make sure we are able to pay the debt.

To do this we must develop our projected revenues and expenditures, and assess whether the profits earned after use, the loan will allow us to pay the fees necessary to cancel the debt.

Evaluate and compare different financial offers
Before deciding on a particular financial option, we must evaluate and compare financial offers it all there on the market.

We must look at all financial institutions that could give us credit, and the products they offer, taking into account the cost of the loan, the deadlines, the financial institution’s reputation, its customer service, etc.

Something to keep in mind is that not always the largest financial institutions and knowledge will be the best option, but there are specialized institutions in the sector it belongs to our company, to be designed especially to boost this sector, may offer more attractive products .

Taking into account the total cost of financing
When evaluating and comparing different financial products that exist, we must consider the total cost of financing, but not the interest rate.

The total financial cost includes the interest rate, plus other costs normally included additions on the loan such as the costs of issuance or maintenance.

So before you take into account the interest rate, which in reality we consider is the total financial cost, which is the real rate of interest payable.

Read the fine print well
By acquiring a loan, before signing the contract, we must take our time and read it, paying particular attention to the fine print.

We must read if there are conditions or additional costs which we were unaware, and we should not hesitate to ask any questions or queries necessary, if you have any questions or concerns.

Negotiate better terms
We must always consider the possibility of negotiating the loan, trying to get a lower interest rate, lower fees or, in general, better conditions.

We should never rule out this option, especially if we are already customers of the financial institution, or have already shown a good ability to borrow.

To request a credit or loan from a bank or financial institution, we must first determine what amount we’re going to apply, and analyze in a first instance if we are able to pay that amount.

Second, we must evaluate the various financial deals that exist, taking into account the loan amount, term and each bid costs (fees and commissions).

At this point we must bear in mind that the interest rate indicated banks or financial institutions is often not actually the only cost to pay for the loan, but there are usually other costs not mentioned in the first instance, such as maintenance fees.

In evaluating the various financial deals, we must also take into account the bank or financial institution itself, that is, regardless of their reputation, their attention quickly to assess your application and to give us the loan, etc..

Third, once we know the amount, cost, and time, we evaluate whether we will be able to repay the amount to pay for this, we must find the monthly fee to pay (which can give us the same bank or financial institution), then include that amount in our income and expenditure projections (projection of our cash flow), and thus whether the revenue we generate, we pay for these fees.

Fourthly we must find out what the requirements requested by the bank or financial institution we have chosen, it is usual that we ask the following:

• Experience in the market: 6 months to 1 year at least be able to demonstrate it is necessary that the company is certified.
• Be eligible for credit: that is, not be classified as a delinquent customer or deficient in meeting its obligations.
• Have borrowing capacity.
• Historical financial statements.
• Projected financial statements (budgets or projections, especially cash flow projections).
• Declaration of income tax.
• Trade references.
• Ratio of three major customers (past billings).
• List of major suppliers.
• Commercial guarantees.
• Business plan (in the case of investments, for example, to expand the business): This requirement can prove that one has full knowledge on what is going to invest, can also assess whether the business is profitable, and if one will be able to repay the loan with the fruit of the business.
• Formal presentation.

Several of these requirements will vary according to the bank or financial institution, and according to the amount requested.

For example, if a bank or financial institution specialized in microfinance mypes or the requirements may be more accessible, for example, can you ask for only 6 months experience in the market.

Even in some cases, the staff of such entities, not expected, but goes directly into our business to collect the information himself.

Even these institutions do not ask for collateral or guarantees up to certain amounts, just call or submit a draft business plan, show income, show the movements of your company, etc.

Following the steps, in fifth place, we must prepare to answer the questions we do about our company, ready to say why we need the money, provide details of the investment, demonstrate ROI, and prove that we are able to pay the debt.

And finally, it will wait for the bank or financial institution to assess and measure the risk of extending credit and, accordingly, decide whether to approve the loan.

In addition to the amount and requirements or conditions that may apply, the factors or criteria should take into account when deciding on the most suitable financial offer are:

The cost of borrowing
Before taking into account the interest rate offered by banks or financial institutions, which in reality we must take into account is the total cost of financing (known as total financial cost or actual cost), which is formed by the rate interest, plus other costs normally included in the loan, such as the costs of issuance or maintenance.

The total cost of financing is the true rate to be paid on a loan, and is the most important thing to take into account when comparing different financing options that exist in the market.

The loan term
The period is the period of time gives the bank or financial institution to repay the loan and pay interest. In evaluating the various financial deals exist, we must consider that the period is granted us according to our ability to pay.

The lower term is generally lower interest rate but higher fees to pay. And longer term, usually higher interest rate, but lower fees to pay, and therefore the possibility of acquiring a larger loan.

The type of interest rate
Another aspect we must consider is the type of interest rate. We must consider whether it is a fixed rate, variable interest rate, or a combined rate.

Fixed rates are constant during the life of the loan, variable rates are set according to certain parameters, and the combined rates usually start at a fixed rate and then become variable rates.

Fixed rates allow us to know in advance what the fees and, therefore, provide control and security of knowing how much are we going to pay. While rates have uncertain variables that may increase at any time, but usually are lower than fixed rates.

The main parameter to set a variable rate is the country’s economic situation, so if the economic situation is unstable, it is advisable to purchase fixed rates to avoid sudden increases in assessments. But if the economic situation is stable, it is recommended to buy variable rates that typically are lower than the fixed stars.

The depreciation system
We must also take into account the system or depreciation method used by the bank or financial institution, which points to the way they are going to repay the capital and therefore pay off the loan.

Basically we use two methods: the German method, where quotas are decreasing, ie initially charged high fees, which then will decline, and the French method (which is now the most common), where quotas are fixed, ie, all periods are paid the same fee.

Early cancellation
We should also consider whether the business credit gives us the possibility to make additional payments in order to reduce the debt, or to cancel in advance of the deadline given.

We must bear in mind that sometimes the early termination option, may represent an additional cost to the loan.

The financial institution itself
Even when we are the ones who are going to receive credit, it is always desirable to take into account the reputation and experience of the bank or financial institution.

We must evaluate their customer service, their willingness to give us all the information you require, their ability to address any concerns you have, its speed to assess the request for the loan, etc..

Credit History
And finally, to choose the business credit indicated, we must consider our credit history.

It is advisable to purchase the products of financial institutions which are already clients, in order to form a good credit history and thus have access to credit later in more facilities and benefits.