For most small business owners – especially those just starting out – getting a business loan is a must in order to create a solid foundation on which to grow. Yet applying for this type of loan can be tricky. Oftentimes when a business owner gets denied, they blame the lender, when in reality it was they who actually didn’t do their homework and prepare adequately. If you’re considering filling out a loan application, here are a few tips to help improve the chances of getting approved.
Be Proactive – Before you sign your name to that loan application, make sure your business is approval-worthy. Start by running a credit report and checking to see if your score is high enough. You’re entitled to a free copy of your credit report each year, which you can get online through various sources such as Equifax and Experian. If you notice any blemishes, work to correct them before applying.
Put it in Writing – Most lenders want to see that a business plan is solid before they’ll extend a loan. Before applying, take some time to freshen up your business plan and include a detailed explanation of how you plan to spend the money if you’re approved, as well as a plan for how you will repay it.
Choose the Right Lender – Aside from banks, many businesses are able to secure loans from other sources, such as other businesses, benefactors, state and federal government and even online lenders like Prosper. Since applying for multiple loans can negatively impact your credit, you’ll want to focus on choosing the lender that is the best fit for your business. Do your homework before you apply.
Paint a Picture – When you’re filling out the application, try to accurately paint a picture of what your vision is for your business so that the lender can clearly understand why you’re requesting the loan. Tell your business’ story and answer questions in a way that supports your reasoning.
Don’t Take it Personal – Before applying, understand that there’s a chance you could get denied. Try not to take rejection personal. It is a “business” loan, after all. Keep your head up and keep striving toward your dream. When the time is right, everything will fall into place.