Tips to help small businesses get a loan
At some time in the business life cycle, most small business owners find themselves, having to apply, for a business loan. This can be an overwhelming experience; however, by educating yourself about the process of obtaining a business, you can make the whole experience go much smoother. There are certain steps that you can take that will help to facilitate the process, of obtaining a business loan. Here are some tips to help small businesses get a loan-
- Prepare and plan-In the lending world of today, there is no just filling out a loan application and have the lender consider you. You will need to prepare and plan, just to apply for your business loan. The bottom line is that the amount of time you spend in your preparation will largely determine how successful you will be in getting the business loan you are seeking. There are several steps to this planning and preparation phase. Some of these steps are-
- Obtain a copy of your personal and business credit report-You should request a copy of both of these credit reports, well in advance, of applying for your business loan. The reason for this is that you need to go over both credit reports carefully. Your lender will be examining both of these credit reports, so you want to make sure that neither report has mistakes or inaccurate information. If you were to find problems, it is important to understand that correcting them can be a time consuming process. You do not want this to hold up your business loan application, so you should take this step, as soon as you are considering applying for a business loan. Finally, do not overlook taking are of your personal credit. Your potential lender will want to see how you manage your personal finances, and will consider it an indicator of how you will manage the finances of your small business.
- Have a well written business plan-At one time it was believed that you did not have to present a business plan, to a potential lender. This is misconception. Your potential lender will want to see that you have a plan, for your small business. You will need to be able to show what you are doing to do with the money, and most importantly to them, how you will repay the business loan.
- Develop a relationship with your bank-Small business owners need to make sure that they have developed a relationship with a potential lender. This not only increases the chances, of obtaining a business loan, but also helps to develop a valuable informational resource, for the small business. Your banker can provide you with valuable information that can serve to help you grow and develop your small business. These following tips can help you to develop a relationship with your bank-
- Work with a bank that has business experience, in relation to the size and type of your small business
- Be a great banking customer! You need to make sure that your business accounts are handled in an effective way. This means you need to avoid low balances that can lead to bounced checks and overdrafts.
- Start by borrowing a short term loan and then quickly repaying it. This not only show the bank that you are serious about managing your small business finances, but it helps to establish your small business credit.
- Always keep your bank informed about what is going on with your small business. This includes but is not limited to: any issues that may be coming up, missed projects or late payments. If you are willing to communicate with your bank, they will be much more willing to work with you.
- Develop a personal relationship with the person who handles the bank's business clientele. Having a face to face relationship can only be beneficial for your small business, and increase your chances of getting a business loan.