Your small business loan application needs to impress your business banker if you want to secure the financing you need, and that financing is crucial to jumpstarting your business needs. So what can you do to make your application stronger? Read on for a simple checklist to make sure you have all your bases covered.
1. The 5 C’s
The Character of the borrower, the credit Conditions, the Capacity for repayment, the Capital being invested in, and the Collateral backing the loan—these are the 5 C’s of the loan application process.
Lenders want to make sure that they aren’t taking a huge risk by lending you money. The whole story behind your business is something that lenders want to know about.
Collateral is getting more and more important in the world of small business lending, so this one gets mentioned twice. In recent years, there has been an industry shift towards lending to individuals whose applications are secured by collateral. Even luxury assets, like fine wines and expensive artwork, can be used as collateral. Moreover, having collateral can significantly reduce the interest rate that the bank charges you.
3. Relationship with Lender
Lenders don’t just secure the financing of your small business; they also monitor the progress of your small business and track your business’s finances. Most banks want to have a strong relationship with the entrepreneurs who borrow from them. Bankers will provide assistance on cash management and equipment financing, or offer solutions for various consumer questions.
Make sure to provide detailed information about your company’s financial numbers. How much capital you’ll require, how much it’ll cost to finance equipment… all of these things are crucial for the lender. The more specifics you have, the more dependable and accountable you will appear to lenders.
Biz2Credit can help you navigate the financing process. Visit https://www.biz2credit.com to seek guidance from a small business loan expert!