Whether you are a small business or an established enterprise, getting business loans is not an easy process. A lot of the things that involve getting money can be a little complicated. After all, we were all told that money doesn’t grow on trees. If you are planning to get a business loan, here are a few things you can do to make it easier for you.
Get To Know Your Lenders
Large banks aren’t your only option for getting a loan. There are many alternative lenders too, some of which include:
● Peer-to-Peer Lending Sites
● Direct Online Lenders
● Small Community Banks
Do your research and find which lenders you have in your state. Maybe you live on the west coast, so you’ll have to look for business loans in California. When you do your research, you might find something with a low-interest rate. Keep your options open because sometimes lenders lessen their interest rates when they find out you have other lenders in mind.
Be Clear on the Type of Business Loan You Need
You should know that business loans aren’t the same, there are so many different types. It will depend on what you need, the terms specified, and the length. Some examples are:
● Term loans
● Line of Credit
● Invoice Financing
● Working Capital Loans
● Equipment Loans
It’s vital that you determine what type of loan you want. You have a better chance of getting your loan approved if you explicitly specify what you need. Be clear on what you will use it for and how much you need.
Make Sure That All Your Documents Are In Order
Transparency is a must. You should prepare all of your financial statements, tax and accounting records before you apply. There’s a good chance that they will ask for it and it’s best if you already have them at the ready.
It’s also better if a CPA audits your financial statements. If you are a small business, you probably don’t want to spend more on hiring someone to handle the bookkeeping. However, a CPA certified financial statement is a way to get your business loan approved.
Other documents that they may look for include:
● Tax Payment Records
● Business Credit Report
● Federal Tax ID
● Certifications of the Company
● Bank Statements
Maintain A Good Credit Score
A poor credit score can immediately terminate your chances of successfully getting that business loan. So, before applying for one review your credit report. Check for any mistakes that may have lowered your score when it’s not supposed to. Pay your bills on time and settle your debts.
A 550 credit score is good enough, but if you have a 700, then you have a great chance at getting your loan approved. Also, don’t apply for multiple loans at once. It could negatively impact your credit score and will make it difficult for you to get another loan. Apply for one loan at a time, prioritize the one that you need most.
Prepare Your Business Plan That Will Pay Off the Debt
Of course, lenders won’t easily give you the money if they see that you may not have the ability to pay it back. They need security that their money will get repaid. Show them a solid business plan. Provide your strategies and clear financial growth goals.
Prove to the lenders that you look into financial growth in the future of your business. You can also show them that you have sufficient cash flow that will pay off the loan. If not, your assets, both company and personal, are at risk if you are not able to pay.
Prepare Your Best Presentation
During the presentation is the time for you to convince the lenders to approve your loan. You should make them understand what you do, what your business does, your strategies, and of course your payment plan. This is kind of a crucial part of your application. You need to make them see that they are not risking their money in your business. Be prepared to answer their queries straight to the point.
Do Not Lie or Provide Falsified Documents
Financial statement fraud is never a good thing. Even if you think that better numbers in the book might raise your chances, never do it. You are risking not only your name but your company too. It is important to emphasize your business’s strengths but never exaggerate them.
Follow these tips if you have found it difficult to get a loan for your business in the past. Remember, if one lender doesn’t give you a loan, there are always plenty of other options.