While lending for larger companies has always been pretty consistent, it fluctuates quite a lot for small businesses. Various economic factors mean that your loan will either be incredibly easy to secure, or one of the hardest phases of your start-up period. Regardless of this, there are a few ways you can make it easier for you to secure your business loan.
Before you make contact with anyone at the bank, you need to get your finances in order. In most cases, a business needs to have been profitable for three years to qualify for a loan. However, this doesn’t mean that there aren’t exceptions here and there.
Bear in mind that almost every lender will go through your credit history with a fine comb too. Due to this, it’s important that you beat them to it, and dispute anything that’s inaccurate and harmful. Whether you do this using your own resources, or through a third party such as aaacreditguide.com, you can’t afford to have any black marks. You should also be aware that you’ll need to personally guarantee a loan, unless you have enough collateral within your company.
My next tip is to fine-tune your pitch. Unless your profit margins are exceptional, you won’t get anywhere by sending in your documentation and asking for a loan. You need to tell your business’s story, especially if you don’t meet the business’s minimum standards. Perhaps your niche is expected to see a lot of growth in the coming years, or you’re set to form a partnership with a more successful business.
Things like this can really strengthen a pitch, and make the difference between approval and denial. Your pitch should include past successes, prospects for the future, and should set you apart from your competitors. Remember that you’ll be pitching to someone who hears these things for a living! You can find a handy guide to business pitches at entrepreneur.com .
Finally, go local. As you can imagine, a large, national bank isn’t likely to hear you out if you don’t meet their criteria. You wouldn’t approach Apple or Virgin hoping to get a partnership. By the same token, you should be targeting lenders according to your business’s size.
Visit a community bank, and you’ll have a much better chance of getting your foot in the door. Obviously, there’ll only be so many of these around, so make sure you fine-tune your pitch as much as possible! It may be worth looking into SBA loan programs as well.
Through these, a large chunk of the loan can be guaranteed by the federal government. This will reduce risk, and paint the prospect of your loan in a much better light. Don’t take this as an excuse for a lazy pitch though! While these processes are longer, and involve more paperwork, it may be the best course of action for your small business.
I hope these tips get you closer to securing your business loan. Setting out for a loan may feel daunting. However, even the most obscure businesses stand a chance!
Featured photo source: Pixabay