Getting a small business loan can be a complicated undertaking at times. A process that will make your hair turn grey and your face turn red. It does not have to be that way, though. You can go through the process in less time without hassles if you opt to use an online comparison site that does all the hard work for you.
They will have you type in some basic information and run it through their database. Offers from their partners will flood your computer, from which all you will have to do is go through them all and pick the most promising offer.
Sounds easy, doesn’t it? It is if you follow the steps on the platform and if you follow the tips below. They will help improve your odds of getting a small business loan through any lender that you have chosen.
Make A Great Business Plan
The business plan is the meat of your business. Take the time to do it correctly, even if you must have a lawyer look it over. Every lender that you talk to will want to see your plan. Not just a sheet of paper with some goals written down on it. Use a good template and ensure you include all the information the lender will want to see.
- Executive Summary – What is your business all about, and what will it bring to the market.
- Company Description – Company details and who you will be targeting.
- Market Analysis – How your competition is doing and what makes them successful.
- Company Organization – The legal aspects of your company and who will be running it.
- Service or Products – Summary of what you are offering.
- Marketing – Detailed explanation of your marketing plan.
- Funding – How much do you need, and what do you plan to use it for.
- Financial Outlook – What do you expect your profits to be, and why.
- Appendix – All your supporting documents.
It may look a little complicated, and it is. There are many good books on the market that can guide you through the process, or you can hire a professional to help you out. Either way, do not apply for a business loan until you have it perfect. One little mistake or any data withheld can speed your application into the trash pile.
Work On Your Credit
Your personal and business credit will be considered when trying to get a start-up business loans. From the time you turn eighteen, you should have been working on your credit, so you should have a high credit score and an impeccable payment and living history. Even then, you may still not have a high enough number to get yourself pushed to the front of the pack. There are a few things that you can do to increase it within a short amount of time.
- Pay Your Revolving Credit Accounts – If you have any revolving credit accounts, pay them down as far as possible.
- Increase Your Credit Limit – Ask all your card and credit holders if you could get a credit limit increase.
- Remove Any Errors – Scan through your entire report and go through the process of removing anything that should not be on it.
- Remove Negative Marks – If you have some negative marks on your record that you have paid off, ask for them to be removed from your report.
These are some quick ways to boost your credit number. You can always get some credit cards for a couple of months and make sure you pay the balance off every month on time. Plus, never exceed 35% of your credit limits because it shows terrible money management.
Rent Your Location Unless You Already Own It
This tip may confuse you, but when you are trying to get a loan, the lender will not look favorably on a loan if you are planning to use part of the money to buy a location. They would much rather see you spending the money on investments that will have a good return, such as tools to properly offer your service to consumers or materials you need to produce your products.
If they grant you a loan, they want to know that their investment in you will bring you a profit, which means they will get paid back for the money they put on the line.
Have Your Documents Ready
The lender you choose to go through will want proof of all the information you have provided to them, and all the paperwork you used to answer their questions will need to be supplied. If you are trying to get a loan from an online-only lender, you may have to fax or scan copies. Either way, have all your papers ready.
- Credit report
- Bank Statements
- Tax Returns
- Income Statement
- Balance Sheet
- Budget
- Cash Flow Projections
These are the most common pieces of information your lender will ask for. You may be asked to supply other documents, or they may not need any. Have all these documents ready to go just in case they want them and be prepared to obtain copies of anything else they may want.
Final Thoughts
The lender will want to know that you have done all your research and that you have done everything possible to ensure that your business is a successful one. Sadly, many companies fail within the first five years, which is what lenders worry about. The more evidence you can show them that you are not going to become one of the statistics, the more likely they will be to grant your loan.
When a lender sets up a time to talk to you, if they do, make sure that you know all about your business and the industry in which your business will be classified. Be confident when asking questions, and never say that you do not know the answer to a question. The bottom line is that if you know how to be a successful business owner, you will know how to answer any question they throw at you.
