Make Your Loan Application Process Smooth with These 10 Tips
Financing is a fact of life if you run a business because almost every company winds up needing business loans or other forms of financing to keep things moving. You might not need credit for cash flow, but you will probably still want to finance for large asset purchases at some point. The key to getting access to those resources is understanding the process by which they’re awarded, then grooming your application and your company until you are attractive to the lender. Here are the top ways to do that, starting with actions you take long before applying for a loan.
Cost-effectiveness is key when you’re taking out loans. You need to reduce the impact on your day to day overhead without adding too much expense to the total transaction. That means going for the best possible rates for the given category of financing, and it begins with your credit score. Raising the score means making payments that are reported, so if you don’t have credit lines, request that your suppliers and vendors report for you. Not all of them will, but the ones that do will help you get business loans in the long run.
After that, the next three tips will help you pick out your loan and find a pool of lenders. First, make sure you’re doing research into your options. Then, once you’ve picked a loan structure with some advantages, go looking for the specific lenders that offer that loan type, and compare them based on just that type. Finally, remember to apply with multiple lenders to increase your chances of a quick decision about your loan.
Next up, you need to write and submit your business plan. Make sure you have all your financial information collected before you start because it will make the process faster. It’s also a good idea to do this with a team so you can get extra eyes on the drafting and editing processes. You’re going to want to include details about your marketing and an explanation of the way the loan money will help you increase your productivity and income. You’re also going to need to be sure you have accurate financial projections, so bring your financial team in to construct those portions.
That brings us to the last three tips to get your business loans. Make sure you’re asking for an amount that is within your reach with your income. Many companies overextend. Also, make sure you know how long a decision can take, and apply early so you don’t miss a closing. Finally, remember there are always other credit options, so consider which assets you can lease and which ones you need to prioritize loan coverage for.