Having a small business loans application filled and turned in doesn’t ensure you’re going to get that loan. At least not when you’re doing things the wrong way.
Most business owners, especially the ones who are just starting, have no idea what they need for their applications to be successful. The thing is that your small business loans application must be joined by several other documents.
In the following, we’ll extrapolate a little more on this issue so, in case you’re hoping to get a loan to make your business work, you know what to do beforehand. Of course, by reading this, you’ll be maximising your chances to get your small business loans application approved.
A List of Things You Should Do to Have the Application Approved
- Prepare a thorough business plan
Without a business plan, and a great one at that, your chances of getting the green light on your application are halved. And that’s optimistic. But put it like this: would you lend money to somebody that doesn’t have a clear vision as to where he/she’d like his/her business to go? Probably not.
This is undoubtedly the most important aspect that will get the application approved or not.
- Don’t ask for more than you can afford
This is where you should take a careful look at how much revenue your business produces before entering a contract with a lender. He/she is going to analyse that anyway, so you can save the both of you some time and do some calculus of your own.
Most applications are rejected because people have unreasonable financial requests. A lender might give you the loan, but you’ll be burying yourself in debt. Be careful and make sure you can afford to pay back the sum you’ll receive.
- Make it clear why you need it
Perhaps you need funds for a certain investment you’re positive will turn out to be a gold mine for you and your company, but you don’t have them. Maybe you need some cash flow.
This list could go on forever, since the reasons why a business owner would need a loan are virtually uncountable. Assess what you need the loan for and ponder on whether a loan is the best idea or not.
If it is, then don’t forget to emphasise the reason(s) to your potential lender. The more straightforward and confident you are, the greater your chances will be. If you have no idea why you need the loan, you definitely shouldn’t get it.
- Don’t wait until the last moment to prepare your documents
All required documents should be prepared before even filling out the application. In most cases, the application will have to be handed over to the officer dealing with your request together with these documents.
They include tax returns, credit file (in order to see if you have any defaults or late payments in your history), revenue statements, profit statements and obviously, your credit score.
If you’re waiting to pile these up until the next moment, you are taking from your own time. That’s something to keep in mind.
- Repair your credit and provide proof it’s coming along
As you might know, 90% of lenders care about your credit score more than about anything else. If your credit score is a little lower than it should ideally be, contact a credit repair company and have it fixed.
You should give the lender some proof that you’ve taken demarches in plastering your reputation. Moreover, if the low credit score is the consequence of some occurrence you could not control, you might be in the clear.
Your small business loans application might be approved in spite of your bad credit.
- Accept to tie the loan to a collateral
You’re not bound to do this, but if a loan is secured, the small business loans application will be approved quicker, because the lender will have 100% trust in you. Or not, but they will be sure they will be able to get their funding back if you go down into debt.
Accepting a collateral is somehow considered proof that you’re serious about your commitment to the loan and that you won’t pose any threat to the lender. Be careful, though, because secured loans are not as safe as you might think.
If you thought that having your small business loans application approved was an easy thing, this article was definitely an eye-opener for you. Loans are serious things. Therefore, you can’t expect the process to be an easy one. However, if you have all things sorted out and you’ve behaved yourself exemplary, the loan you’re looking for will be granted to you without too much hassle. You can find out more about small business loans with us. We’ll give you step-by-step instructions and advice.