5 tips for getting your small business loan approved
Whether you're starting a new initiative or taking advantage of a growth opportunity, you'll probably find yourself needing a little extra capital at some point. But with access to capital still a challenge for many business owners, what can you do to try to maximize your chances of successfully applying for more funding?
While I can't guarantee success - I wish I could! Here are 5 tips that helped me get the funding I needed when I was starting my business.
1. Be prepared
According to the U.S. Small Business Administration, your first step when applying for a loan should be to determine exactly what your business requires financially. By having this ready ahead of time, you'll demonstrate you're a responsible and qualified borrower.
When I applied for funding, I gathered all the necessary documents and was ready to field the questions I felt that potential lenders were sure to ask (and they did!). I even practiced my loan application interview before the real one to ensure I was fully prepared.
I think it's also important to determine exactly how you would incorporate the financing into your business plan. Ensure you have a well-written and thorough plan prepared for your meetings with potential lenders.
2. Plan well ahead
AllBusiness.com recommends preparing a plan for repaying the loan before you borrow. While you may not need to present this until after the lender has agreed to the loan, it's good to have one ready ahead of time. You can use any projections you've developed to help solidify your plans.
3. Focus on the future
An article on Inc.com recommends you stress what makes your business different, highlight your potential and how it can be a valuable asset to lenders. In the article, James Walter, CEO and founder of BBC Easy, advises, "Don't just say you want a loan, turn in your documentation, and expect the loan officer to rubber-stamp your request. Fine-tune your business pitch to include your future prospects - not just highlight past successes."
4. Shop local
People love investing in the healthy development of their community. The same rings true when it comes to small business loans. Inc. suggested visiting a local bank to increase your chances for approval with a good loan.
"Visit a community bank and also inquire about SBA loan programs," said Corey Ross, co-founder of BBC Easy, in the aforementioned Inc. article. "Since up to 80 percent of a business loan can be guaranteed by the government under the SBA program, some banks may be more lenient."
5. Do your research
The SBA recommends you research several lending institutions ahead of time. This will help you know your options and may help increase the chances of landing that loan you seek.
When I was applying for a loan, I found this small business loan guide quite helpful. Or you could consider one of these three companies that are transforming small business lending.
The sites I mention or link to in this post are just examples that I thought you'd find useful - I don't endorse them or their services. I have no affiliation with them and make no representation about their services.