4 Ways to Improve Your Odds of Getting a Business Loan
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Don’t lose hope, though! In this blog post, we’ll share four ways that can increase your odds of getting approved for a small business loan.
Consider the Time-Frame
It is important to understand that it’s very unlikely that you’ll sign a few papers and receive a business loan moments later.
When applying through a bank, the loan approval process can take weeks if not months. If you apply to an alternative lender, it will likely take less time. Still, it’s important to consider when you’ll require financing, and determine if the bank or lender will be able to provide the loan in time.
If you need immediate financing, start your application as soon as possible. Many entrepreneurs make the mistake of applying for a loan after they’ve already started a big-budget project, or need financing due to an emergency. This creates complications, and you could run into financial struggles if you don’t have a loan on-time.
Prepare a Solid Business Plan
Write a concise business plan that outlines your plans prior to applying for a loan. Consider any upcoming challenges, and take the time to make solid calculations for how you’ll use a business loan. The more specific you are, the easier you’ll it will be for the lender to determine if you qualify, and provide you with a deal that fits your needs.
Improve Your Credit Scores
To qualify for a business loan, your personal and business credit scores will be taken into consideration. Having favorable credit scores is crucial for people who are applying for business loans, and a poor score can often disqualify you. Therefore, you should build a respectable personal and business credit score so that you can increase your chances of approval. If you currently have low scores, we suggest improving them prior to applying!
To improve your credit scores, identify suppliers that report to business credit bureaus, open a separate business checking account, and pay all your bills on time. In addition, paying off any debt that you’ve accumulated can majorly improve your score. Ultimately, running a financially-responsible business will enable you to boost your credit score, and increase the likelihood that you’re approved for a loan.
Of course, not everything can be done alone; sometimes getting assistance is the best option. Consulting a business loan adviser can help you improve your application. Often, these professionals will determine how much money you need and will be able to provide tips on how to receive the best possible terms. In addition, you might also benefit from asking fellow business owners about their experiences. Find out the lender they used, and determine if this company could provide your business with a loan too!
Do you have tips for business owners pursuing a business loan? Let us know in the comment section below!
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.