Starting a business is an expensive endeavour, and you will probably need a loan to get your doors open. However, business loans can be very hard to get, especially for new start-ups. Fortunately, there are some actions you can take to help improve your chances of getting a loan instead of being rejected.
Know Your Credit History
It’s important to know what is on your credit report and to examine it for mistakes. Sometimes information about past loans or other debts long paid off is still on your report. You may also spot discrepancies or problems, such as credit card applications which you didn’t send yourself. When you spot errors, you need to contact the company that they have been reported by and the credit bureau to get them removed from your credit history.
Confer with an Accountant
It’s important to consult with an accountant before opening a business, as they can help you gather all the documentation needed by a lender for a loan. In addition, an accountant or a financial advisor can suggest alternative ways of getting the capital you need for a business. If you don’t have good credit, they may suggest unsecured business loans as a way of getting the money you need.
Before approaching a lender about a business loan, you should gather all the documentation you will need. An accountant can help you put these documents together, especially revenue projections, competitor analyses, business insurance policy information, and your business plan.
Although you will write most of the business plan, they can help you with the financial information contained in the plan. You will also need to gather bank statements and any invoices you have from vendors or other services that you’ll need to get your business started.
Look Up Rates
Do some research and find out what the currents interest rates are for business loans. This can help you apply with the right lenders, and going to lenders with some information may allow you to negotiate a better rate if you have a stellar credit history. Lenders are in control of their loan rates, so they can negotiate them, despite what they may tell you.
Getting a loan is not much different than undergoing a job interview, so you need to go in with a great attitude and a smart appearance, and be ready to promote yourself. Give the lender reasons to approve your loan by explaining why your business is needed in your community, why the products you’re making are needed, and how the funds from the loan will be used. Be sure to also provide collateral for the loan. By providing all the information you can about your business, how it will make money, and why it is needed, you can make a good case for why you should be approved for a business loan.
There are options other than bank loans to start your business, so don’t just examine loan rates from banks. Also consider alternative lenders who may be more willing to lend you money.