Posted on: 21 March 2017Share
Small business owners can sometimes struggle to secure the financing they need to move their businesses forward. For some, applying for a loan from a local bank is the answer. If you applying for a small business loan, here are some tips to help improve your chances of approval.
Create a Plan for the Funds
When you apply for a small business loan, the bank wants to know how you plan to use the funds. If you are unclear on how, the lender could be leery about loaning your business the needed funds. A simple explanation of "to grow the business" is not sufficient.
Before submitting your application, take the time to create a detailed plan that outlines how you plan to use the funds. You also need to include a projection of how your plan will benefit your business. You also need to detail what your expectations are if you are not approved for the loan or if the funds do not have the impact you wanted.
Boost Your Credit
The bank's top concern is whether or not your business is capable of repaying a loan. If your business or individual credit history is not enough to prove that you can, you might want to look for ways to boost your credit.
One quick and easy way is to get a cosigner that has good credit. If you are able to partner with an individual that has good credit, the bank will feel more confident about receiving repayment. It is important to note that if you do take on a business partner, he or she might want to be involved in the day-to-day operations of the business.
Meet with a Financial Advisor
In an effort to prove to the bank that you are ready for a business loan, you should consider meeting with a financial advisor. There are several benefits to reviewing your business's finances with an advisor. For instance, the advisor can help you clean up your business plan and ensure your projections are reasonable.
An advisor could also pinpoint areas that might cause concern for the bank. By knowing now what objections you could face, you can work on those before submitting an application.
There are countless other business banking services that could be useful to your business. Consult with a bank representative to learn more about the lending services and what you can do to improve your chances of securing financing.