3 Ways to Increase Your Chances of Getting Approved for a Small Business Loan
Applying for financing can be a very stressful time for any business.
Not knowing if you’re going to be able to get approved is the toughest part, especially when it’s in a life or death situation.
And, while we would love to encourage you, out of the small businesses who apply for a loan, only a minority get the money they asked for – if they get any at all.
That doesn’t mean that nothing can be done to put yourself in a better position.
As a matter of fact, there are plenty of ways that you can increase your chances of getting approved by making the right moves.
Here are a few ways that you can do it.
Know the Process
The first thing you should do is get familiar with the application process.
There are some basic steps to applying for any loan, and knowing them could be very helpful.
This will allow you to know what you should and should not do, what type of documentation and statements you have to be ready to produce, and what lenders like to see in a borrower.
Have a Clear and Legitimate Plan
Know that lenders are more likely to help you pay for inventory or promotion that they will to help you redecorate your office.
This is why you should have clear plans for the money, and make sure that it’s either to foster growth or support critical functions.
Just saying that you want to get financing to “grow your business” won’t cut it either.
You need to have a clear plan of action and show realistic projections for them to consider you.
Consider Alternative Lenders
It’s no secret that banks are not the biggest fans of fledgling small businesses, but you are under no obligation to work with them.
There are plenty of alternatives you can go for. You could go for a credit union, for instance. Or you could go online.
There are tons of alternative lenders that will look beyond your credit score to see if you’re eligible.
Some will rather look at the general health of your business, like your cash flow, for instance, to see if you can get a loan.
So, don’t assume that everyone will reject you just because your bank did.
In addition to alternative lenders, you should look at alternative loans too.
You could look at secured loans, for instance, if you have valuable assets or invoice factoring, which may be more dependent on your clients’ credit than yours.
Also, know that different loans can have very different rates, so be aware of that when you’re making choices as well.
All of these tips could help you significantly improve your chances of getting financing.
Whatever you do, make sure that you know what to do to make yourself attractive to lenders, and work on turning your finances around to minimize issues in the future.