Getting a business loan can be the most stressful thing, but without adequate capital, it’s difficult for small businesses to grow and thrive.
So how can you increase the chances of getting a business loan?
- Improve your Credit Score –
This is the most important part in increasing your loan options. Many people make the mistake of applying for loans while their credit score is bad, which would only result to rejection or less funds approval.
Make sure you pay off debts, settle every financial issue that might be harming your credit score.
Your lender has to have a good understanding of how risky it is to do business with you or rather, a certain level of trust which your credit scores serves as a tool.
- Prepare Necessary Documents –
This also has an important role to play in securing a loan, different lenders have application requirements, nonetheless you will need to provide a bit of information, which may include
- Proof of ownership
- Business tax returns
- Business licenses
- Bank statement
- Identity Card
- Utility bills
- Be Specific –
Don’t ever go to the bank or a lender and ask how much can you borrow. Instead, tell them exactly what you need in order to come off as a professional instead of desperate. State how you will use the money and how you intend on repaying.
If you are just asking for a loan, without explaining why you need it, you simply will appear as unserious or someone with no specific goal that just wants to cover up problems in your business. People that apply for loans either want to expand or invest, or even cover some expenses or cash flow fluctuations but they know exactly what they want.
- Plan Towards a Loan –
Without a plan or preparation, you could get lost on your way. Instead, focus on creating a plan for every step of the way.
“Plan and prepare everything before you start the process of getting a loan. Better yet, come in contact with the bank even if you still don’t need the money. Ask some questions, be present. Have everything in place for when you can finally get the loan” – says Padma Bikes, a business consultant at Writemyx and Next Coursework.