Three Tips That Will Help Improve Your Odds of Getting a Small Business Loan
BY: MEGAN TOTKA ON THURSDAY, OCTOBER 12, 2017
One of the first steps to owning a small business is to get funding. While many small business owners use some of their own capital, most take out loans. Small business loans are also taken out when the owner of a company wants to expand their operations. No matter which of these two categories you fall under, today we are going to give you some tips that will help improve your odds of securing a loan for your business needs.
Have a Plan for the Money
Before you walk into a bank or other lending institution you will need to sit down and write a plan for how you are going to spend the money. Banks want to know what you are going to be doing with the money they are lending you and for good reason. If what you are spending the money on is considered a risky investment, then they may decline their offer. The lenders who feel comfortable giving out small business loans are more willing to give more and for better interest rates. Just like the business plan you put together when you first dreamed up your business, you will need to have a detailed plan for the money you are borrowing.
Boost Your Credit Score
While you are taking a loan out for your business, the lending institution is going to be looking at your personal credit score. Having a poor to fair score may hinder your ability to secure a loan. So, before you go searching for a loan, make sure that you check your credit score first. This will let you know where you stand, and if your score is low, you will need to repair your credit. There are many ways to repair your credit score including paying your bills on time, paying down some of your debt, and opening new lines of credit. After a few months, you will notice that your credit score is slowly on the rise. Remember, the higher you can get your score, the better your chances of getting that loan.
Learn to Be Patient
The process of getting a business loan is not going to be like getting a car loan. It will take time and you will have to fill out a large amount of paperwork. A small business loan may take up to 90 days to process. Not only does the loan officer you are dealing with have to approve the loan, those higher up in the lending institution will likely have to sign off on it. So, make sure that you are patient through this entire process. Walking away from a loan because it’s taking a long time to process won’t get you anywhere and may even hurt your credit score.
These tips will not only help you get through the lending process, they will also help you get a better interest rate. By having a good credit score, you will have the opportunity to borrow the money you need at a rate that you can afford to pay back. So, if you are in the market for a small business loan, make sure to keep these tips in mind.
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