e-business getting a bank loan

how can you do this with a great virtual store but no actual assets?

[Sports Workout]

I know of several online business with no office, no machinery/equipment or any other assets, but do great business on the web via adsense, affiliate sales, and drop shipping.

how do sites like this get a bank loan with no physical assets? or does your "dot com" count as 'real estate'?

Any helpful advice (or clever thinking) is welcome:)

[CernyM]

Lots of businesses do not depend on fixed assets to collateralize loans.

Banks usually look for the following from small businesses:

* Two years in operation. If the business isn't two years old, my experience has been the banks won't talk to you at all. (Two years is an SBA guideline, I believe.)

* Decent financials. The bank will want to see that you have the cash flow to pay back the loan.

* Good personal credit. A bank will require a personal guarantee on any loans for your small business.

If your business is registered in some way (tax id, incorporation, etc), then you should start receiving solicitations in the mail for loans as you near the two year old mark.

[lecaptain]

Banks like security - this means physical security for the money they lend you.

If it's sunny the bank gives you an umbrella, once it starts to rain, they take it back. If you can provide security for their investment then they're your friend. If not, then they may help, but don't count on it.

If you want bank investment for an internet business (the bust is still a recent memory) then be prepared to put an equal amount on the line. Whether this is from security in real estate or cash (credit cards or savings).

In my experience Internet Real estate is worth very little where banks are concerned, hard cash and a solid trading history count for everything.

[Raymond]

From experience banks only look at your balance sheet. If you have at least 1 year of healthy P/L statement with some assets to boot, they will treat you like any other businesses.

[netguy]

Sports Workout, you might also want to consider putting together a business plan.

This would outline historical information on your company, and a future outlook based on your industry. Summerize your business operations including actual and 3-year projected financials based on some conservative assumptions. Prepare an executive summary, general company description, your products & services, your marketing plan (and parallel markets you can efficiently exploit), initial capitalization, your background/management skills, etc. that can quickly inform prospective lenders of what you and your company are all about in a couple dozen pages.

While such a plan isn't necessarily required for a bank loan, it often provides the banker with a little added professionalism that can often 'tip the scales' on a loan if it's marginal.

Most importantly, going through the steps of preparing a plan can also help you see things you might not otherwise think about for the future success of your company.

Providing a well-thought-out plan to friends, neighbors, or 'Uncle Howard' may also result in getting the required funds without going to a bank - or at least assist in finding a cosigner that can help push the bank loan through.

Good luck.

Steve