Whether you're looking to expand operations, launch a new product, or overcome a temporary financial challenge, having access to capital is essential. While different lenders have particular standards and regulations, there are some basic steps business owners can take to improve their chances of scoring a loan.
- Build a Strong Credit History: Your credit score is one of the first things lenders will look at. Having good credit, both personally and through your business, will increase your chances of getting approved and securing a lower interest rate.
- Create a Detailed Business Plan: A thorough business plan that details your company's objectives, financial projections, and tactics showcases your vision to potential financiers. Make sure to include strategies for sustaining cash flow to manage business operations, expenses, and, most importantly, future loan payments.
- Identify the Loan's Objective: Explain the overall purpose of the loan, how much you would like to borrow, and how it will be used to grow or sustain your business.
- Outline Your Track Record: Lenders often consider how long your business has been in operation, with banks often requiring two years and online lenders requiring at least one year. Businesses with a successful track record are more likely to secure a loan.
- Research Lenders: Explore different options, including traditional banks, online lenders, and credit unions. Make sure to compare their terms, interest rates, and requirements to find the best fit for your business.
- Prepare Legal & Financial Documents: Lenders will want to review your business's financial records, including balance sheets, profit & loss statements, and tax returns. In addition, many will want proof of your business license, any commercial leases, and articles of incorporation (if that applies), among other things.
- Understand the Different Loan Types: It's important to educate yourself about various types of business loans, such as term loans, SBA loans, lines of credit, and microloans. Each has unique features that make it suitable for various uses.
- Submit a Clean Application: Make sure to thoroughly edit your application, ensuring that it's polished, accurate, and appealing. Make sure you've addressed all lender requirements and that your presentation is professional and persuasive.
Once your business loan has been approved, make sure to compare the different interest rates, fees, repayment terms, and the speed of funding to determine the best fit.
For all of your business insurance questions, call or contact Wilson, Timmons & Wallerstein, Inc. today.