Securing a loan becomes the deciding factor when you are in a situation where you have to decide whether to stay open or shut down. Thankfully, there are many proven techniques that can help you get your application approved. There could be many reasons for a small loan such as purchasing new equipment, hiring employees, or boosting production line. The process becomes painful when your application is rejected continuously and you desperately need money. Don’t worry because here are 5 tips that will help you secure a loan.
Find a suitable lender
Five out of ten applications are rejected because people approach wrong lenders. Approaching the right lender will increase your changes. Your choices should be:
- Big banks: You can approach your bank for a loan. Since you already have a relationship, you can easily get a small or big loan. They may guide you if they aren’t able to help.
- Alternatives: They are like a bridge between community lenders and big banks with moderate requirements. Most alternative lenders focus upon potential growth vs credit score before lending money.
- Community lenders: Local banks or lenders having interest in economic growth may be a good fit for a local business.
Demonstrate that business has steady income
Health of business is judged by the steady income it generates. If you are able to demonstrate that your business is growing and you have plenty of money to pay on time, lender may give you the loan. Show your financer how much cash you are generating, and be ready to provide tax returns, bank statements, and financial statements. These documents provide an overview of the business. You can expect questions about fluctuations in cash flow, and if there were losses then be ready to provide explanations.
Sustain a positive payment history
Your payment history is one of the most important factor. The lender will see business record of paying debt, and on time. A third party credit report about your business may also be the deciding factor. You can ask to see the report so that you can confirm its accuracy. You can provide references, and be sure to include contact information of your trade supplier or bank.
Prove that your judgment is accurate
Potential lenders want to know that you are ready for challenges and have a good plan in place. Lenders may also want to see your management plan and how you will overcome obstacles. If it is possible then have a business plan that clearly shows your finances. The plan should have forecast for your business at two scenarios: How your business will perform after getting a loan and how it will perform if it doesn’t get a loan.
be ready to apply to multiple lenders
Things might not go your way so be prepare to apply to multiple lenders. It is common for a business to apply to more than one source to get approved. Persistence and perseverance are important to secure a small loan. Even if you were turn down, thank the banker for reviewing the application. Don’t take anything personally, and remember that if your business sees success, you may have to apply there once more. Most banks have an explanation for rejection, talk with them and ask how you can address these issues in future applications.
Where do i apply?
You can apply with your bank or use on of these private lenders below:
KABBAGE.COM – #1 Online provider of small business loans. Kabbage puts the power of business growth back in your hands by giving you convenient access to working capital.
Enjoy ongoing access to your line, and take the funds you need day or night. Pay only for what you take and draw against your line as often as once a day.
Select the amount you need and they’ll deposit working capital directly into your bank or PayPal account. No waiting in line.
Requirements: 1+ year in business & $50K annual revenue.
Lines of credit from $2,000 to $100,000.
A+ Rating with the Better Business Bureau