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Improving business loan chances

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Chances are that if you are a business owner at some time you will need to take out a business loan. Business loans can be an important part of raising the capital for your business. While this can be a daunting process it can be handled smoothly and successful if you are willing to do your homework ahead of time.Here are some ways to improve your business loan chances-

  • Get a copy of your credit report both for the business and for you. If your business is a start-up or a small business the bank will be making a decision based your credit-worthiness as well.You should start by getting a copy of your credit report and making sure everything that is listed is correct. This also includes items that should be reported that may not be.
  • Shop locally for your loan. Start by visiting the bank that you currently do business with. If you have been a long-time customer, this will significantly increase your odds of getting credit with them.In addition a local bank is much more likely to invest in a local business.
  • Go with the plan in hand.When you do visit your bank be sure to take a copy of your business plan. This shows that you are not only prepared, but you have also laid the foundation for the new business.This will inspire confidence in your lender and will also improve your chances of getting a loan. It is important to keep in mind that your business plan needs to determine not only how much you need to borrow but must also take into account that the business must be able to afford to make timely payments of principal and interest, even during the startup phase where little revenue is coming in.Your business plan should also include a well-written executive summary.
  • Be willing to invest in yourself. Keep in mind that if you have already begun investing in your business, or plan to, this will also help with financing. If you are willing to invest your own money into the company, the banks will see that you are very confident in both yourself and your new business. Financial experts advise that a 25% commitment will vastly improve your chances.
  • Know the information the bank will want. Whether you need to borrow money now or in the future, it is always good business practice to know what information a banker or other lender will need in order to grant your loan request. The lender generally will require information that falls into two broad categories.The first is general information about you, your business product or service and your plans for the business.While some banks will use their loan application to gather this information it can be helpful and wise to prepare a clear, written presentation of the general facts about you and your business. You should include in your written presentation details that present your management background, abilities, and accomplishments as well as those of your key management personnel. The second type of information a lender will be requiring is financial information.This will include several key documents, each of which plays an important role in the lender's decision. Keep in mind that it is critical that you present all financial information in a formal and professional manner. A sloppy financial presentation is almost certain to result in the rejection of your business loan request. The financial documents should be prepared by your accountant in advance of your loan request.Included in this should be the sales potential of your product or service. This should also include your short-term and long-term marketing plans and how you intend to handle any problems or opportunities which your business faces.
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