Getting Approved on Your First Small Business Loan
Many established business owners will attest to the fact that applying for a small business loan can be a tough challenge, particularly for new start-up companies. Nevertheless, a bank loan is still the most reliable financing resource to support your long term plans for your business.
In this article, let’s discuss tips on how you can increase your chances of getting approved for a small business bank loan and minimize the risk of denial.
Establish a partnership between you and your bank. As a new owner of a company, you may not have established business credit history yet so it is ideal to seek out a business loan from your personal bank where you have opened your personal savings or checking account.
If you have been a long time customer with that bank, you are more likely to be granted approval for your small business loan proposal. Needless to say, your bank will assess your capability to make loan payments based upon your payment history with your personal accounts.
Have you previously been granted a personal loan? If yes, have you been consistent in submitting your monthly payments until you have completed your loan’s term? If you have, then it can be a big factor in winning your banker’s approval for a business loan.
Check your personal credit report. For business owners with no credit history, personal credit standing is a major issue. Before submitting your business loan application, make sure that you are aware of your credit status.
Order a copy of your credit report from each of the three credit reporting agencies and look for possible errors or misinformation that could affect your credit. If you discover that your credit rating needs improvement, you may consider working on that first before applying for a business loan.
Prepare Your Paperwork. Be ready to submit the necessary documentations that your lender may require. Check out this website (http://www.business.gov/finance/financing/loans/loan-checklist.html ) for a Checklist of Prerequisites for applicants of small business loans.
Meanwhile, if you are applying for a loan that is guaranteed by the U.S. Small Business Administration, here is a checklist of the documents you will need to prepare (http://www.business.gov/finance/financing/loans/sba-loans/sba-loan-application.html).
Prepare for the Interview. Part of the process when applying for a business loan is the actual interview. Upon meeting your lender, you need to clearly present your plan and your reason for taking out a loan.
You need to be confident about how much you need and what you intend to do with the money. Will you use it for purchasing equipment, hiring workers, building or renovating your office, etc? Furthermore, you need to be able to present a doable repayment plan to convince your lender that you are worthy of their approval.
Seek Professional Advice. Before submitting applications, you can visit your local SBA office or Small Business Development Center (SBDC) to ask for advice about how the application process works. You can also do your own research from the US Business Government website (http://www.business.gov/) or the SBDC’s (http://www.sba.gov/aboutsba/sbaprograms/sbdc/index.html) website.
Irish Taylor is a bussiness loan consultant with Startup Business Loans and has been providing consumers and business owners with startup business financing since 1992. For years she has helped people with credit and loan problems especially pertaining to business start up, SBA loans and Unsecured loans.
Copyright 2008.
Related Article: Borrowing Money To Build Your Business
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