Countless entrepreneurs seeking to start a business begin the journey by applying for a small business loan. It’s a sum of money to get the ball rolling, so that you have cash to work with when you’re trying to get your company off the ground. But the business loan application can be complicated, and many entrepreneurs get rejected once or more times.
The trouble with loan applications is that if you apply once and get rejected, other lending institutions can see that in their database, and they might be inclined to reject you as well. To ensure that doesn’t happen to you and that you get approved right away, read on.
- Have a Rock-Solid Credit Score
Nothing kills a loan application like a bad credit score. If your score is sub-par, it may be a good idea to wait a while and give you some time to boost the score before you apply for the first time. To build your credit score, make sure every single bill that comes your way gets paid on time. Inquire within your bank about setting up automatic payments, so that even if you forget, the bills will automatically be paid for you. Don’t open new credit cards during this time, either, because every time you open a new account, your credit score takes a small hit.
- Have a Clear Picture of Your Business
Don’t go into the loan application process with only a wishy-washy idea of what you want your business to be like. Have a clear image, down to exactly what kind of customers you hope walk into your store. Really envision the business you hope to open. Show lending institutions that you have given this process a lot of thought and are in it for the long haul. Ultimately, lenders will lend to people who will repay the money in a timely fashion.
- Be Clear About Finances
Lenders get nervous when they meet potential borrowers who seem like they don’t know what they’re doing when it comes to money. Get your own personal finances in order first. Take a class if you have to, or read some books about how to be financially sound. Only someone who knows about money and how to handle it will be an interesting candidate for lenders. They need to trust that you know what you’re doing and that you’ll repay their funds on time and in full.
There’s no one recipe for getting an application approved on the first try, but these tips will make you better prepared and more likely to get that coveted “yes.” For more information, visit www.biz2credit.com. Our consultants are here to help you find the best loan option for you and your small business.