There’s no sure-fire recipe to guarantee a loan approval. Applying for a loan is a lot like applying for college. You can do all the right things and still not be guaranteed approval, but doing so will greatly increase your chances.
Have a Strong Credit Score
A solid credit history shows you are reliable, credible, and trustworthy. These are key qualities loan officers look for when evaluating applications. Lending institutions need to know you’ll pay back their money in a timely fashion.
Have a Great Idea
A unique business idea is much less likely to be turned down than one that is unoriginal. Why? Customers love novelty. Something new that will surprise and excite people is usually more likely to do well. Opening the third nail salon in town? Yawn. Opening a salon that offers mani-pedis, massages, and aroma therapy in a spa-type setting — now that is something different. Check out the range of services at Able Body Spa.
Be Clear on Your Math
If you’ve ever seen the ABC show Shark Tank, you know the entrepreneur sharks hate when someone pitches an idea while being unclear on the finances behind the business. You need to show you’re money-savvy, responsible, and diligent enough to do your math homework.
Your business plan and application should not be verbose and excessively long. This will bore the reader, and you’ll come across as an overly complicated person. Boil it down to the basics – the main details written in a clear fashion. Certain elements are absolutely required:
- Executive Summary: A concise explanation of your company’s goals, operations, marketing efforts and revenue model. (This may be the only portion of the business plan that a loan officer will read.)
- Business Description: What does the company do?
- Competitive Landscape: Assess the competition and explain why your business will be different.
- Product or Service: Explain what you offer
- Sales, Marketing and Promotion: Detail how you will inform the marketplace about your firm, including your web site, advertising, p.r. and social media
- Management: Tell who is running the business and their experience
- Financial Data: Provide a break-even analysis, cash flow projection, sample balance sheet and profit-and-loss statements. It is important to provide an estimate of sales, revenues and what type of return investors can expect.
- Investment: Explain how much of your own money are you investing. (If you are unwilling to put much of your own money into it, investors will be wary about sinking their money in, as well.)
- Supporting documents: Research, charts and graphs, logos, photographs, etc.
Submitting the loan application that has the potential to change your life is of course a daunting process. That’s why it’s always helpful to consult experts who have read many business plans in their lives. Don’t shy away from asking a successful entrepreneur for help, and of course, the consultants at Biz2Credit are always ready to guide you on your path to success.
Biz2Credit is offering a three-part webinar series with business expert Dawn Fotopulos, called “Unlocking the Secrets.” It launches on Wednesday, Nov. 18, at 3:00 p.m. EST, and is geared to help small business owners generate more profit, improve their cash flow, and plan for future, sustainable growth.
Registration is free, and Fotopulos, an acclaimed author and entrepreneur in her own right, will provide tips on how to run your company. Register here.