If you have a good reason for wanting a business loan, such as to fund expansion, you’ll soon find yourself learning more about the process. While there are many details to consider, it’s important to take a few key steps in improving your chance of an approval.
Here are several things that will work in your favor:
Create a Business Plan
If you don’t yet have a business plan, now’s the time to create one. Not only does it increase your chance of getting a loan, but it will also benefit your company for many years to come.
Tip: don’t rush through the process of creating a business plan, as you can expect the lender to carefully review it.
Review Your Credit Report
When was the last time you reviewed your personal credit history? If you don’t know the answer, request a copy of your credit report to learn more.
Lenders use personal credit history to help aid their decision, so a strong history and credit score will work in your favor.
Tip: if your credit needs some work, don’t hesitate to put the time in before applying for a business loan.
Put Up Your Own Money
Why would a bank believe in your company when you don’t believe in yourself? When you put up your own money, you’re showing the lender that you truly believe in your idea.
Also, when you have your own money on the line, you’re more likely to do whatever it takes to achieve success.
Tip: most lenders like an owner to have a minimum of 25 percent equity stake in the business they’re seeking the loan for.
Search All Your Options
Since you’re most comfortable with your current bank, it makes good sense to first speak with them about your business loan needs.
However, don’t stop there. There are hundreds upon hundreds of local and national lenders offering all types of business loans.
As you compare several of these, you’ll come to find that some are better than others in regards to rates, customer service, fees, and other key details.
Tip: don’t assume that bigger name banks are the best. There are times when smaller lending institutions have just as much to offer, if not more.
Once you decide to apply for a business loan, the only thing left is to move through the process in an efficient manner.
As you get started, let the above advice put you in better position for success. If you keep these details in mind, you will increase the likelihood of securing the loan that’s perfect for your business.