Sometimes, it seems impossible to beat the odds of securing a business loan. The approval depends on the confidence of the lender in your idea and the capability of returning the borrowed amount. Businesses benefit significantly from cultivating relationships with possible lenders even if they aren’t currently looking for a loan.
Here’s how you can increase your chances of securing a bank loan:
1. A Solid Business Plan
Although some lenders may not require you to submit a business plan, a concrete one, followed by an executive summary, will aid the application process by clearly indicating that you’re prepared and organized to take on the complexities of your business venture. It will allow them to see you need the loan, and how the idea is likely to generate profits so dense, you’ll return the borrowed amount in no time. You want to have a plan for how the funds being borrowed will be used — the inventory, marketing, research, development, expansion, and equipment are all aspects in business that require a hefty sum.
2. Is the Credit in Check?
A good credit score indicates that you are a good candidate for the loan. While the business credit score ranges from 0 to 100, the personal credit score is likely to range from 300 to 850. The score should help them see that you are a responsible citizen, capable of returning the amount in time. Rechecking your credit score will help you evaluate your credit history closely — just in time to eliminate the errors in your report. Also include related balance sheets, income statements, and cash flow statements alongside your application.
If your business is currently running, you’re going to want to pair your loan application with detailed results of how your existing business can assist you in returning the loan in time. This is referred to as the free cash flow, or amount of money the company has at the end of a specific period that needs not be utilized in continuing business operations.
It’s important to do your homework to allow the lender to trust you more. Lenders are more likely to work with well-educated, knowledgeable borrowers who understand the complexities of a business loan. By researching how lenders work, you should be able to empathize with them.
3. Review Your Presence
Your lenders might perform due diligence before giving out their approval — this includes the review of information made available for public consumption online. Your company’s website must be polished, professional, and updated to show your good side. A good idea is to pair this with reviews from third parties on associated social media accounts. Credit scores can also be improved by updating your business profiles on credit bureau websites.
Reach out to Kapil Munjal, a business plan writer and owner of ADEPT Business Plans Inc. in Vancouver, Canada. Adept Business Plans offers services drafting custom business plans, Provincial Nominee Program (PNP) immigration business plans, marketing plans, and financial plans.