For all businesses new and old alike, making sure you have enough money to operate can be a constant source of stress. There are a ton of different ways a business can obtain capital, but one of the most common methods is by applying for a business loan. Preparing a business loan application for the first time can be quite challenging and stressful. Use the five tips below to guide you through the application process and increase your chances of getting approved.
Tell Your Story
Lenders will only approve your loan application if they can be sure you will be able to pay back the loan in the future. It’s your job to document you will have the revenue necessary to do so. The lenders will most likely ask you for bank statements and the purpose of the loan, you can really help paint a better picture of yourself and your business by providing the requested documents in a timely and organized manner. Regardless of what paperwork they ask for, you should make a few essential details clear to the lenders to improve your chances of getting a loan and document your ability to repay the loan. If you have a business plan, be sure it provides the answers to the following questions:
- What industry do you work in?
- What does your business do?
- What will you use the loan for?
- Who are your clients?
- When and how do you get paid?
- What are your margins?
- Have you managed credit well in the past?
- Does your business have a documented record of success?
Get Ready for High Expectations
Nowadays, lenders are a little more cautious about who they will lend money to. They follow strict guidelines for qualifications. It is not uncommon for lenders to ask for additional paperwork or to require some kind of collateral. Prepare yourself for the possibility of a rejected application. Though it can be disheartening, it just means you will need to work with your lender to find a way to get approved for the loan and or make all efforts to improve your application strength for the next time you request a loan.
Consult an Accountant
Many business owners struggle to determine how much money to ask for when applying for working capital business loans. New businesses usually require enough funding to support 36 months of growth, so they can become profitable and sustainable. Meet with your accountant to talk about your business’s needs and to determine a realistic amount to ask for. An accountant can also help you create a financial statement and scenario plans.
Improve your Credit
You may be surprised to learn that your personal credit score is taken into account when applying for a business loan. Before applying, obtain a free copy of your credit score to see where you stand. If you need to improve your score, take the time to do it and improve your odds of getting your loan application approved.
Maintain a Relationship with Your Lender
Even after getting a loan, you should work hard to maintain a friendly relationship with your lender. They are responsible for tracking the performance of the loan and the financial health of your business. By maintaining a positive relationship, you can use your lender as a resource and receive guidance on payment solutions, cash management, financing, and more.
To find out more about obtaining capital for your business, contact us at GetMoney.com.