How do you transform a great idea into a successful business? It’s easy! That is, if you have all the necessary resources. But you know that’s not how it always works. At some point you will need funding. This is when you may turn to a loan for business expansion. But the catch is, not all business loan applications get approved. Unless you meet a series of eligibility criteria, a business loan may just remain a distant dream. Here’s how you can change that!
Improve Your Chances of Approval
1. Think from the lender’s perspective
If you were to approve a loan for business, what would you expect from the borrowers? Maybe a convincing reason to lend money? Enough proof that they’re worth the risk? Perhaps much more. Putting yourself in the lender’s shoes can give you an unbiased view of what is expected of you and why. Be sure to address your own shortcomings and enhance your positives before you apply.
2. Start early
Getting a loan for business is not as simple as walking into a bank, filling out a form, and getting approved on the spot. It involves several steps and may take longer than you imagine. Give yourself and the lender enough time to go through the process. So start well ahead and do not wait until you’re in urgent need of funds.
3. Handle your credit history
Lenders are looking for a credit score of 720 or higher to grant you a loan for business. As much as you would like to keep your personal finances and business separate from each other, lenders won’t refrain from taking your personal credit history into account. If your credit score is not all that great, focus on improving it by paying bills on time and using less of your approved credit line.
4. Prepare well & be organized
Lenders are interested in knowing how you will be utilizing the funds. So prepare yourself with specific answers and avoid giving vague responses. Be ready with every piece of information and necessary documentation to produce when required. This will create a good impression about your efficiency.
5. Get expert advice
You may have a clear idea of how much funding is needed to grow your business. But the lender is more likely to trust the word of an expert more than yours. So get the opinion of a financial advisor to determine the amount you will need for business expansion. The fact that you’re communicating with experts gives lenders the confidence that you understand your finances well. This acts as a plus improves your chances of approval.
Getting a loan for business may seem like the be-all and end-all of it. But don’t forget that business loans are just a means to achieve a much larger goal. While your loan application may be approved, that alone doesn’t guarantee the success of your business. Besides timely loan repayment, sustained efforts and efficiency are crucial to realize your vision.