Securing financing in the modern business landscape an uphill battle, full of obstacles. Here’s what businesses can do to make sure they have the best chance possible at small business loan approval.
Be Prepared & Organized
Preparation is key. Come with all of the required documents neatly organized and ready for inspection. Organization shows the lender that the applicant is serious about their money. Have essential documentation like bank statements, licenses and registrations, commercial leases, and articles of incorporation ready along with the business’s balance sheets, an accurate list of assets, and tax returns. Failure to provide documentation is almost a guaranteed failure for most applications.
Improve Cash Flow
Good cash flow indicates the business can produce enough cash to cover the loan payments. Improving cash flow doesn’t necessarily mean increasing sales; try collecting from customers by offering discounts for paying early on outstanding invoices. It’s a quick way to make the balance sheet look better.
Strengthening the Business Credit Score
Businesses have their own credit score and a report should include the company’s payment record, total debt, the number of loans recently applied for, along with the credit available. Make sure the info is correct and try not to add any further debt while making a loan application.
A Detailed Credit Plan
The credit plan is an outline of how much credit will be offered to specific customers and the plans for repayment. Customers that are creditworthy are what banks look for when making loans. Focus on the development of policies and procedures governing the company’s credit policy.
Build a Solid Relationship with the Lender
Some of the ways to cultivate a profitable relationship include applying for business credit cards through the lending institution, transferring checking/savings accounts to the banks, and making any payments on time.