How to Qualify for a Small Business Loan

Small business loans can be a big deal. Often, it’s what a company needs to achieve the next degree of success. If you’re applying for one, it’s important that you don’t rush the process, and that you put your best foot forward. When opening a line of credit, either with a bank or an online lender, you want to make sure you follow these steps so that your loan agent will know you’re serious about your business.

Make Sure You Have the Proper Documentation

Gather some basic documentation about you and your company before applying for a loan. This will help make the whole process easier and more likely to produce the results that you want. Because every loan program is unique, there will be specific forms that each agency uses or different documentation that they require from you. This will be especially important if opening an account with an online lender. Most of the time, however, you’ll be submitting a lot of the same info for any number of loans.

Make it Clear Why You Need a Loan

Don’t think of a loan as more money that you can use to run your business. If you’re opening a line of credit, it should be to accomplish specific goals. How much money exactly do you think you’ll need to accomplish that goal? Providing this information will make it clear that the loan you take out won’t go to waste, and that you have the potential to earn more than you already are and can pay the loan back. 

Have a Solid Credit History

Good credit is an incredibly important step in any loan application. It’s important to remember that if you’re a small business owner, a loan agent will be looking through both your business’s credit report and your personal one to find discrepancies. You will increase your chances of being approved for a loan if you determine a plan of action to address problems in your credit report. If you have bad credit, you should put effort into improving your score immediately. The better your score, the better chance you have of being approved.

Make Your Presentation Clear and Concise

When reviewing your business plan, make sure your goal for the loan is evident quickly and is easy to understand. Even if you’re working with an online lender, you’ll likely have to deliver a compelling presentation before being granted a loan, so putting together a professional package that includes financial statements, charts, graphs, and a sense of narrative can help to persuade your loan agent to take your application seriously. Be sure also to remain concise and well-organized.

Consider Seeking Financial Advise

It’s almost certainly a good idea to seek advice from a professional financial advisor if you have any uncertainties about whether you will qualify for a small-business loan. It’s always helpful to get a second opinion about your business from an impartial source, and a financial advisor can help you look better for your loan agent and for your customers. The Small Business Administration is just one organization that helps new and established small business owners with the application process, so make use of them if you’d like some assistance.


Featured image: DepositPhotos – AndrewLozovyi