A critical stage in the small business loan application process happens before you even begin filling out an application form. There is much advance preparation to be done.
You might be a very successful entrepreneur with a stellar credit score, and you still will not receive small business financing without the proper preparation. Read on for a list of steps you must complete before you will even be considered for a loan.
1. Write a Clear Business Plan
This is the first step in convincing a lender that you are a great candidate for a small business loan. Include clear and concise details about your short-term and long-term business goals, market analyses, projected revenue, and plans for expansion and growth. If you have an existing business that is credible and financially stable, write that in the plan as well, and include details about your established business’s past revenue and expenses. Biz2Credit can help you write your business plan, if you need guidance.
2. Know the Loan Amount and Purpose
Once you have clearly defined in your business plan what your goals are, you can specify exactly how much money you will need to accomplish these goals. Be clear what you will spend the money on as well, such as equipment or advertising campaigns.
3. Examine Your Credit History
You should definitely evaluate your credit history before heading into a lender’s office. Lenders need to know that their loan will be repaid—in full and in a timely manner—and your credit score is perhaps the only way to ensure that you are creditworthy. Lenders will also be curious to see your personal bank statements and tax returns—especially if you have never started a business before.
4. Prepare Collateral
Oftentimes, loans require you to have some kind of collateral, just in case something goes wrong and you are unable to repay the loan. Regardless of the type of collateral you choose, make sure you know how much it is worth.
5. Don’t Give Up
Different lenders approve loan applications differently. If you do not succeed in applying for a loan from a bank, you may be able to secure funding from a credit union, micro lender or cash advance company.
Biz2Credit can help you prepare your loan application. Visit the website or call (877) 861-2210 for help.