If you’ve recently started a new business and you’ve come to the conclusion that you’re already running short on funds, you are probably considering how to apply for a business loan. Needing a loan in order to keep the business flowing until capital is stabilized is something you can convince yourself or your business associates of with ease, but it’s not as simple a task when it comes to the bank you are asking money from. Your lender will probably require a whole lot of you, not to mention that they will thoroughly judge you to figure out whether or not you’re worth the investment. Knowing in advance what lenders are interested in can help you build a strong case for approval. Here are some of the most important things that you need to know about:
You don’t need money to have a plan
Many business owners make the mistake of assuming that as long as they don’t have money but they need it, they qualify for a small business loan. As you might imagine, that’s not really the case. You will need to convince the lenders of just how solid your plan is to get them back every last dime they’ve invested with you through the loan. The only way to do that is through a smart and solid business plan so make sure that you have a very well thought out strategy to present to your lenders when submitting your application.
Financial statements must be in order
Your financial statements will play an important role in how your application is perceived so you must make sure that every relevant piece of documentation is available for review. There are several important documents that you need to make sure are prepared, including balance sheets and income statements but also tax forms and even cash flow sheets. This is of course, in case you already have a small business and are looking to get a loan. If you are approaching your lenders with a brand new startup idea, the game shifts towards financial projections, which will be needed instead.
Get your personal credit in order
It might seem a bit off that personal credit is relevant in matters of business loans, but the fact is that lenders want to make absolutely sure that they are getting back what they pay. Often times, major problems can be spotted within an entrepreneur’s personal credit records, thus signaling a red flag to the lenders. Taking care of your personal credit score as well as the credit of all your business associates or people directly involved with your organization can make a very big difference when it’s time for a decision regarding your acceptance.