NEW YORK, NY / ACCESSWIRE / September 23, 2024 / Applying for a business loan can be stressful, especially if it's your first time. From organizing bank statements and tax returns to creating a comprehensive business plan, a lot goes into applying for a small business loan. The process may be intimidating, but it doesn't have to be overwhelming. You can create a strong application and improve your approval odds with some research, planning, and preparation. Here's what to do when applying for a loan for small business.
Work on your credit
Improving your business credit score increases your odds of getting a small business loan. Though many alternative lenders are willing to look past poor credit and consider other eligibility factors, there's no denying that good credit brings advantages like better rates and terms. Here's how to boost your credit score before submitting a business loan application.
Establish business credit: If your business doesn't already have a credit profile, create one by applying for a business credit card.
Improve personal credit: Some business lenders check your personal credit score, business owners with no business credit or a short business credit history can benefit from improving personal credit. Focus on making timely debt payments and keeping credit card balances as low as possible.
Repair damaged credit: Business owners struggling with poor credit may want to consider delaying their application to build better credit. Work with a business consultant or small business credit counselor to improve your credit score before applying for a small business loan.
Organize your paperwork
Incomplete paperwork is a common reason why lenders deny small business loan applications. However, you can get ahead of this problem with some planning and research.
Research the requirements: Look beyond the paperwork that lenders have requested on the application form. Call the lender directly and enquire about any supporting documentation that may help your application.
Create a checklist: Typically, lenders require bank statements, business and personal tax returns, projected balance sheets, income and cash flow statements, list of accounts receivable, schedule of business debts etc. Create a checklist so you have everything you need well ahead of time. Err on the side of caution by gathering more information than explicitly requested. This way, if the lender asks for additional paperwork later, you're ready.
Perfect your business plan
A business plan should include an executive summary, company description, market analysis, description of your products/services, marketing/sales strategy, and funding request. Creating a business plan can be tedious, but you can't afford to neglect it.
Consider working with a professional: Business owners who don't have the time or expertise can hire a business writer to help craft the perfect business plan. Work with a highly rated professional or request your network for references.
Use the right tools: Leverage business plan templates to help create your business plan. You can use survey tools to support your market analysis and accounting or financial planning software to track expenses and project future revenue.
Get input from an experienced mentor: There's nothing like a second set of eyes to give you a fresh perspective on your business plan. The best insights come from mentors who have experience in your industry. However, a close collaborator or peer may also be able to spot mistakes or recommend improvements.
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SOURCE: Kapitus