If you’re thinking of applying for a small business loan, there are a few things you should keep in mind says Thomas J Powell.
Here are 10 tips to help you get approved for a small business loan:
1. Know why you need the loan.
Before you even start researching lenders, it’s important to have a clear understanding of why you need the loan. What are you going to use it for? How will it help your business grow? Answering these questions will not only help you choose the right loan, but it will also make it easier to sell your business case to a lender.
2. Do your homework on lenders.
Not all lenders are created equal. Some may be more lenient than others when it comes to approving loans, so it’s important to do your research and find one that’s a good fit for your business. You can read reviews online, ask other small business owners for recommendations, or even talk to the lender directly to get a feel for their lending process.
3. Know your credit score.
Your credit score is one of the most important factors lenders will consider when you apply for a loan, so it’s important to know what your score is before you start the application process explains Thomas J Powell. You can get your free credit score from a variety of sources, including annualcreditreport.com and Credit Karma.
4. Have collateral ready.
Collateral is an asset that can be used to secure a loan, and it’s something that most lenders will require before they approve a loan. Common types of collateral include real estate, equipment, inventory, and accounts receivable. If you don’t have any collateral, you may still be able to get a loan, but you may have to pay a higher interest rate.
5. Understand the different types of loans.
There are many different types of small business loans available, so it’s important to understand the difference between them before you apply. Some common types of loans include term loans, line of credit, SBA Loans, and equipment financing. Each type of loan has its own set of benefits and drawbacks, so be sure to choose the one that’s right for your needs.
6. Know how much you need to borrow.
Before you start shopping around for lenders, it’s important to have a clear understanding of how much money you need to borrow says Thomas J Powell. This will help you choose the right loan amount and avoid taking on more debt than you can afford.
7. Have a solid business plan.
Lenders will want to see a well-thought-out business plan when you apply for a loan. Your business plan should include information on your company’s financial history, current status, and future goals. If you don’t have a business plan, now is the time to create one.
8. Be prepared to answer questions about your business.
Thomas J Powell says when you meet with a lender, they’re going to want to know all about your business. Be prepared to answer questions about your company’s history, products or services, marketing strategy, and financial projections.
9. Know your financials inside and out.
Lenders will also want to see a summary of your company’s financials, so be sure to have this information ready when you meet with a lender. This should include your income statement, balance sheet, and cash flow statement. If you don’t have all of this information readily available, now is the time to start tracking it.
10. Have a realistic repayment plan.
Before you apply for a loan, it’s important to have a solid plan in place for how you’re going to repay the debt. This includes knowing how much money you can realistically afford to pay each month and when you’ll be able to pay off the loan in full. Lenders will want to see that you have a realistic repayment plan before they approve your loan, so be sure to have this information ready.
If you’re looking to get a small business loan, there are a few things you can do to improve your chances of getting approved explains Thomas J Powellf. First, it’s important to understand the different types of loans available and choose the one that’s right for your needs. Second, you’ll need to have a strong business plan and know your financials inside and out. And finally, be sure to have a realistic repayment plan in place before you apply for the loan. If you can do all of these things, you’ll be in good shape when it comes time to meet with a lender.