If you want to secure a loan for your company, your business has to be bankable. And bankability is more than just having a great idea. You and your business need to prove yourselves worthy of a bank’s attention. Here are a few tips to help your business stand out from the pack:
Be Realistic. When making cash flow projections, don’t overhype or undersell. Just be practical and honest about your estimations of your business’ potential earnings. If a bank doesn’t think your cash flow forecast is reasonable, it’ll call you on your bluff. So unless you’re prepared to explain any discrepancies, play it straight.
Do your research. When meeting with lenders, you need to prepared to sell your business idea and sell it hard. Banks want to see that you’ve really thought your ideas through, so it pays to have a solid business plan and a body of market research to back it up. It’s not enough for you to believe that your business has the potential to be profitable. Banks have to believe it, too.
Back yourself up. If possible, make personal investments in your project before turning to banks for financing. Banks take your investment in your own venture as a personal vote of confidence in the future success of your business. If they see that you are confident about your business prospects, they’re more likely to respond favorably to your loan application.
Start Small. For a small business, smaller loans are easier to secure than larger ones. Consider first applying for working capital of $20,000 to $50,000. Then, as your business grows and you prove to your lenders your reliability when it comes to making loan payments, you’ll be in better position to apply for further financing.
Be honest. When applying for a loan, don’t try to hide the weaker aspects of your credit history. Be honest with banks, and they’ll be honest with you about your prospects for securing a loan. And even if you’re not eligible for a loan just yet, chances are that a bank will tell you what you can do to be eligible for one in the future.
This article was submitted by Rohit Arora, co-founder of Biz2Credit. Biz2Credit is a small business marketplace that connects entrepreneurs with financing options and advice to grow their business. Send all questions to