There are a number of criteria that a lender uses when considering your application for a loan or, for that matter, most types of financing. In this article I will attempt to highlight them by laying out a number of questions for you.

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How much money do you need?

This, obviously, is a prime question. The key word is need. You will have to show that your project requires a certain amount of money and that you have done your homework to assure yourself that there is no wastage in that amount.

What do you need the money for?

You will have to fully describe what you will do with the money, and show the advantages to your business that the project will provide.

What is your business?

Tell the lender/investor about your business. How does it earn its income? What products/services does it supply? Is it profitable? How long has it existed? Is it a corporation, partnership or proprietorship?

Who are you?

What is your background as it relates to your work? Do you have the expertise to be successful in the project you have chosen? How many years of experience do you have? What is your credit history? You don?t necessarily have to state this but, you should know what your standing is and be prepared to answer questions about it. What are your interests? What other related skills do you have and are you a qualified business manager? If not, how do you propose to provide the management skills needed by any business?

What products or services does your business sell/provide?

Describe your products or services. More particularly, describe how your new project will fit in. Are there any synergies? Does the skill set required fit in with the overall business?

Describe your marketing plan.

How will you market all the products of your business? It is important here to describe in some detail how customers will be enticed to purchase your products over those of others. Who are your competition? How do you rate versus them? Don?t deal with this one with rose coloured glasses on. Be honest with yourself. This is a place you can learn from what your competition are doing.

What is the financial condition of the business?

In this section you will provide historic financial statements for the previous 3 years, if available. You will also include projected statements of profit and loss as well as projected cash flow statements. Do not inflate these statements. Lenders see many such applications and many of those are figments of somebody?s imagination. They see right through this. Here, you must honestly tell the lender how you will pay him or her back and over how long a period.

Finally, what kind of financing do you need?

The type of expenditures you will make will determine the kind of money you need. Do you need current financing to allow you to provide credit terms for your customers? Do you need long-term financing to provide you the capital to buy needed equipment? Is it possible that you need an investor who will be your "partner"? Will this investor be actively involved in the business or simply be a passive investor? How much of a share will he or she want?