Securing a business loan can be a frustrating process, especially if you’re unfamiliar with how the whole thing works. But having expectations and being prepared for it can help keep frustration at bay and make your application more likely to get approved. Here are seven steps to follow when applying for a business loan.
Have a Solid Business Plan
A well-crafted business plan is key to convincing lenders that your company is worth their time and money. Keep in mind that their goal is the same as yours: they want their investment to grow, which means you’ve got to prove that your business will be successful and profitable.
Get Organized
When it is time to apply for a loan, many lenders will want to see business plans, financial statements, and tax returns. Having these documents ready to go will help speed things up significantly.
Do Your Research on Business Loans
Every lender has different qualifications and requirements, so do your homework before applying for a loan. You’ll want to know how much you’re qualified for and what interest rates are available so that when it’s time, you can choose the right option for your needs.
Figure out How Much You Need
Before you apply for any kind of business funding, it’s important that you figure out how much money you actually need. This will help you figure out which type of loan will be right for your business and will also ensure that you’re not asking for too much money—or too little.
Know What You Need the Money For
Lenders will want specific information about what exactly the money is needed for—including how much is being requested, how much it will cost, and how it will be used within the company.
Review Your Credit Score
Your credit score will significantly impact whether or not your loan application will be approved, so it’s a good idea to review it before applying for any kind of funding. If your score is poor, there are still many options available to you—you may just have to shell out money for a higher interest rate or put down a larger deposit on your loan.
Get Prequalified for A Loan
This will give you an idea of how much money you can borrow and what interest rate you might be charged based on the information you provided about yourself and your business.