Securing a business loan has gained a reputation as being difficult, especially for first-time entrepreneurs. Fortunately, capital is flowing more freely now than it did during the days of the “credit crunch,” and there are many tools with which entrepreneurs can arm themselves.
1. Have a Strong Business Plan
Bank loan officers and other lenders expect that you have a well-written, clear, and thorough business plan. It you do, you immediately become a stronger candidate for a funding. Take the time to ensure that your business plan has no spelling or grammatical errors, and that the plan provides a clear description of your business goals and strategies. The most important part is the summary. It is conceivable that the person making the loan decision will read only the summary section. Be sure it is good.
2. Establish a Strong Credit History
Your credit history is perhaps the most important factor that lenders will examine when determining whether or not to offer you a loan. Before applying for a small business loan, review your credit history and make sure there were no calculation errors. If you have a low credit score, it might be beneficial to take some time to improve it before applying for a loan.
If you are determined to start a business right away, there are other financing options, such as merchant cash advances, that don’t put as much emphasis on credit scores as traditional business loans do. However, the interest rates for these financial products are much higher.
3. Have Collateral
Lenders want to see that you have available assets to pledge in order to secure a business loan. This gives banks the security of knowing that your loan will be repaid somehow, even if things go wrong and the business fails. Property and vehicles are the most popular kinds of collateral, but many banks also allow things like watercraft, and even cash savings.
4. Prepare a Loan Application
A written loan proposal allows lenders to see who you are, what your business model will be like, and how you plan to grow your business. Banks require that you include financial information — both personal and business — such as your net worth and projected sales. Biz2Credit (www.biz2credit.com) case managers have helped thousands of small business owners to prepare loan packages and have a very high success rate. Call (877) 861-2210.