Five Things You Need To Know Before You Apply For A Business Loan
Most businesses need a little cash help every once in a while. Maybe it's to beef up inventory in anticipation of the holiday or other busy season. Perhaps it's to hire more employees and expand operations. Or, maybe it's just to help with day-to-day operating expenses during a liquidity crunch. Whatever the reason, a business loan can help you get the money you need to keep your business plan on track.
However, a business loan differs in many ways from a personal loan. It's important to understand the mechanics of a business loan to help increase your chancese of being approved.
What you need to know about business loans
1. It's about more than just credit score. Although your business history of paying your bills on time is important, it's far from the only factor the lender wants to look at before he or she approves your loan. Just as important are your business and marketing plans. The lender will likely want to be assured that you have a clear plan about where you want your business to go and how you're going to get it there.
2. Realism reigns. While enthusiastic and optimistic projections may seem that they would impress a lender, it's actually better to be conservative and offer the worst case scenario (as well as the best) to them. This way they can see that your business will still survive even if your marketing plan doesn't work quite as well as you had hoped that it would.
3. Your reputation counts. While the lender is considering investing in your business, most small businesses are largely influenced by their key investors, in other words...you. For that reason, the lender will likely want to see information about your personal finances and perhaps even a resume and information about past business experience.
4. It pays to be meticulous in your bookkeeping. Keeping your records up to date and complete helps to show the lender not only the state of your business finances, but that you are organized and have the key financial information you need at your fingertips.
5. Credit score mistakes happen to businesses, too. Consumer credit reports frequently contain errors that can cause applicants to be turned down for a loan. The same thing can happen with business credit reports. Make sure yours are accurate before you put in that loan application.
A business loan can help infuse your company with the cash it needs to thrive and even expand and grow.