Thinking of expanding your business? Introducing a new product line? Or maybe you’re just trying to add some cushion to your cash flow? Whatever reason you’re applying for a small business loan, in order to get approved, you’ll need to have all your ducks in a row. Lenders are looking to work with applicants that can show they have a means to repay. Hence your need to dot your eyes and cross your tees prior to applying.
Here are 3 areas you’ll want to review to improve your chances of getting approved.
Strong Credit History
Prior to submitting an application for approval it is beneficial to review your business credit history. Lenders are looking at your company’s FICO score to determine if you’re capable of repaying the loan. They will check your payment history, length of credit history, and type of credit accounts you presently have. If your business has not been operating long enough, you may also be required to provide personal credit information. Therefore, you’ll want to look over your history as well.
A Business Plan
Traditional lenders are looking for a solid business plan. Since this is something you should have established during the implementation stages of starting your business, this should not be an issue. However, if you don’t have a business plan or things have changed since you created your original plan, you’ll want to fine tune things so that it is up to date.
Profit and Loss Statements
Lenders are going to want to review your financial progress over a period of time. They’ll want to see an accurate account of your company’s sales and expenses. While you should already have these reports, if you do not, you’ll want to get those prepared. As they review your profit and loss statements, lenders are looking to see that you’re reliable, professional, and ethical as it pertains to the management of your finances.
The eligibility requirements on loans for small businesses is a lot more complex than a personal loan. Lenders are ultimately looking to see if your company has a potential for financial growth, manages their existing finances professionally (and ethically), and has the means to repay the loan as promised. Preparing all of above information will put you one step closer to being approved.