A small business loan can unlock many opportunities for startups and established companies alike. If your business is applying for one, keep this article’s tips in mind as you move through the process.
Tip 1: Know How Much You Need and Why You Need It
Lenders will want to know that you have a good grasp of how much you need and how the small business loan’s funds will be used. Articulating that information will be necessary to establish a level of comfort for the lender.
Tip 2: Know Your Credit Score and History
Your business and, in the case of younger companies, personal credit scores and histories will play a role in your chances of approval. One helpful measure is to pull your credit reports and take steps to correct any errors you spot. For more tips on building a strong credit history, check out this article from The Balance SMB.
Tip 3: Know Your Options
A variety of entities provide small business loans. These run the gamut from large, traditional banks to smaller community banks to flexible alternative lenders. Contact a variety of lenders to find an attractive fit.
Tip 4: Tap into Mentors
A mentor can be an invaluable guide through the small business loan application process. You may be able to find one through SCORE, a volunteer mentorship association. Another option is contacting your local Small Business Development Center (SBDC).
Tip 5: Gather Your Materials and Apply
To actually apply, it’s important to have the right materials on hand, including a rock-solid business plan. For more details on how to prepare, take a look at this checklist of documents and this article about preparing a proposal.
Tip 6: Be Persistent
If your small business loan application fails, know that you’re not alone: Many businesses have faced rejection. However, try to view it as a sign that you haven’t found the right lender yet rather than an outright failure. Adjust your application as needed and move on to a new lender.
Want to further explore loans and other business topics? Check out Magis Funding’s additional posts.
