Money: it’s the one thing that may hold a small business back from growth. Whether it’s expanding an operation, hiring new staff members or buying new equipment, small business operators often need to borrow money. Just how does one go about bullet-proofing their loan application and increasing the likelihood of approval? Along with a stellar credit report (for yourself and your business), consider these five simple things which can provide a needed boost to your business loan application:
5 Tips to Improve Your Chances to Get a Business Loan
1.Understand Your Borrowing Needs
When you apply for a business loan, it’s important to make sure you have a full understanding of how much money you need, how long you will need the money and the purpose of the loan. When you take this information with you from the start, your lender will know that you’ve taken the time to evaluate your specific needs. They will know you’re not just applying for a loan to have extra cash on hand.
2. Make Your Resume Shine
When preparing a loan package, make sure to include a resume for owners and executive officers of the company. Keep in mind, lenders will want to know that the people running the business have a solid understanding of the business. They need to see you understand how your businesses operate and you can handle your business finances. The stronger the resumes, the fewer red flags for the lender. This is particularly true if this is your first round of financing.
3. Dust Off and Polish That Business Plan
Having a business plan is a must. Business plans should be crafted for all businesses, regardless of their size. Business plans provide a “blueprint” for a business; owners should have their company goals and objectives clearly spelled out. In addition, the plan should show what path the company is taking towards meeting these goals and objectives. When applying for a business loan, make sure you’ve reviewed your original plan and modified any goals and objectives that have been abandoned. Remember, a business plan is a working document; it’s not set in stone.
4. Understand What Your Profit and Loss Statements Mean
One of the most important things you must demonstrate to a lender is your ability to repay the loan you’re asking for. Lenders may ask for recent tax returns, bank statements, and other supporting documents. However, you must have a working profit and loss statement to show along with your business loan application. To be effective, your profit and loss statement must show that your company follows a specific bookkeeping process. If you’ve thrown together a last-minute statement to show your cash flow, lenders will know this immediately. You should never guess at numbers either; profit and loss statements should accurately reflect your actual income and expenses.
5. Approach the Right Lender
One of the many aspects of getting a loan approved is going to the right lender. For example, if you are attempting to finance for a line of credit to pay expenses needed for hiring new staff, renting a new office or day-to-day operating expenses, you won’t go to a lender who specializes in equipment financing. If your goal is to have your future invoices factored, you won’t go to your local bank: you’ll go to a factoring company. This matters more than you might think because approaching the wrong lender will waste your time and theirs.
Regardless of why you need a loan, you can count on the friendly professionals at Camino Financial. We know that every business owner has different loan requirements and some even have minor defects on their credit reports. We make sure your loan application gets into the hands of the right lender based on your specific needs. Our services don’t stop with just loans; we help businesses with marketing and technology tips to grow their business, and we offer advice to those with less than perfect credit to get on track and rebuild their credit.