Business Loan Check List
There are many ways to fund your business and there are pros and cons for each type. Many small businesses spend years establishing good business credit so they can qualify for business loans, but there are plenty of details to take care of before you submit that loan application. Business loans can be an excellent way to build a relationship with a lender and improve your chances of getting capital funding for larger and more critical projects. It all starts with making sure your finances are in order before you apply for the smaller loans.
Establish Business Credit
Many small businesses that are one-person operations will often try to get business loans based on their personal credit. In most cases, a lender wants to see a business that has its own credit history and you want to avoid mixing business and personal finances as much as possible. You need to go through the process of establishing your own business credit profile and then start doing business with companies that can help you to grow that profile. Good business credit is essential to getting a loan approval.
Update the Business Plan
A lender looks at a loan like it is an investment in your business. Before you can get approved for a loan, your lender will want to see how you plan on growing your business so you can pay the loan back. Preparing to apply for a business loan is just one good reason why you should update your business plan quarterly.
Get the Financials Together
It stands to reason that a lender is going to want to see your company financials as part of the loan application process. You should give some consideration to investing in the services of a certified accountant to put together official financials that will give your lender confidence in the information they are being given.
A Loan Plan
Why do you need this loan? Your lender is going to want to know why you need the loan and how you intend on spending it. Once again, a lender looks at a loan like it is an investment and the lender has every right to want to know how you intend to spend the money.
In some cases, lenders might look at your loan plan and recommend a different type of funding. For example, if you are looking for a loan to help make payroll then your lender might recommend a line of credit instead. By giving your lender as much information as possible, you are allowing the lender to be an active partner in funding your business.
Every important business decision requires a checklist, and that is very true when it comes to getting a business loan. There are several important pieces of information your lender is going to need and the process could be slowed down considerably if you do not come prepared with everything the lender is going to need. Take the time to make a loan checklist and make sure that your business loan application is in order right from the start.