Whenever applying for a business loan, always keep in mind that, getting approval, it’s all about gaining the confidence of your loan officer. Some key strategies are necessary to be prepared for when you apply.
The problem is sometimes business owners overthink and present unnecessary information that the officer isn’t too interested in. What you should do is focus on these key strategies to help you get the green light.
1) One of The best key strategies is to show lenders that you can pay
If there is only one thing that you need to prove to your loan officer, this is it. Your profile will be scrutinized before they endorse your application for approval, but this is the most important message you should be sending your loan officer.
State your financial situation, be realistic with your expectations, and show that your business is indeed turning a profit.
Prove to them that by getting this loan, you will not only be able to pay off your monthly installments but be able to grow your business that will be able to pay off larger loans in the future.
Lenders like to see these strategies in place as it boosts their portfolios as well.
Related: Here are how Lenders Assess Your Business Credit Profile |
Use this Credit Calculator to determine how much “Credit Amount” you can afford based on your monthly payments and the interest rate offered: |
2) Be upfront with your financial situation
Keep in mind that the assessment process is all about earning your loan officer’s trust. So even if your business has had little snags here and there, don’t hide them. Honesty is the best policy.
The lending entity will find out one way or another. And if they realize that you tried to hide these financial issues from them, you wouldn’t look trustworthy.
Just be upfront and candid about these matters, as they don’t automatically disqualify you from getting a loan.
If your business has had downs in the past. Show them how you have managed to get your business back up. And if you need a loan to get the ball rolling, prove to them how the extra money will allow this to happen.
3) key Strategies for Business plans
Just having a business plan is not enough. You should prove that you understand your own business plan to your loan officer.
Proving this assures them that you know the ins and outs of your business and that you understand your market. This gives them confidence that your predicted financial results aren’t just random numbers.
They will want to see the potential market you can supply by acquiring the loan. They may think that you have hit the customer ceiling and there will be no one to market to if you continue to grow.
Showing them a higher demand than your supply will convince them that you have done market research.
4) Exhibit financial knowledge
You don’t have to be a savant-like Warren Buffett. But at least show basic knowledge regarding business and financial matters.
Remember that this meeting will be all about communicating your ideas regarding your company, so knowing what to say and focusing on the key ideas will definitely help your case.
If you do not have this knowledge, take up a course to gain it. Showing confidence in your knowledge will increase their confidence and gain their trust.
By being confident and knowledgeable, you show the lender that you will be confident and knowledgeable to your clients. And this will give them courage in your application.
How To Get A Business Loan In 5 Easy Steps
When you are planning to start or grow your business, a business loan could be a valuable resource, but navigating the loan process, as well as tightened lending standards, can be daunting. In short, understanding your business’s goals, finding a lender, and understanding the application process can help you secure the financing you need for your business.
Continue Reading |