1. Credit Scores Are Crucial
This might seem like common sense, but the fact is that some people lack even a basic grasp of what a qualifying credit score is going to be for a small business loan. Getting a copy of your credit report is going to be vital to your cause. One in four Americans find that there are credit score damaging errors in their credit report, resulting in problems obtaining a small business loan at times for those first going into business for themselves. As scores are between 300 and 850, any damaging errors in your credit report can really tip the tides against your favor. Before applying for a small business loan, make sure that you obtain a copy of all your credit reports (Compiled into a FICO score) and correct them! This can be the difference between starting the business of your dreams or giving up because of credit denials.
Research Every Lender’s Minimum Qualifications And Requirements
Every lender will have a different number of qualifications and requirements for their loans. If you apply to a lender that exceeds your own personal credit situation, you can quickly find yourself being denied small business loans in Indianapolis IN, and you might not even at first realize why you’re being denied. For example, a large number of lenders will immediately reject small business loans in Indianapolis IN from applicants that have had recent business bankruptcies. When you apply and get rejected, this is going to affect your credit scores most of the time, and this can be increasingly damage as you apply more and are rejected more. Find out each lender’s special requirements before you apply! If you know automatic rejections are on the way, it is damaging to your future credit to continue applying.
Remember that online lenders often have more lenient restrictions than SBA (Small Business Administration) lenders. Banks are often especially picky about who they lend to as well. When you seek out an online lender, you often find that you have a better chance of qualifying for a small business loan.
3. Document Gathering Saves Time
When you apply for a small business loan, your lender is going to require proof of the financial situation that your business is in (or proof of the business plan that you’ve lined out for a new business). If you go in to apply and you don’t have crucial business and legal documents, you’re often at a loss in the beginning, and it reflects poorly on your business loan application. Before applying, make sure that you have crucial business and legal documents like tax returns, personal and business bank statements, commercial lease documents, licenses, and anything else related to your business and business plan.
4. Have A Good Grasp Of Your Plan
Lenders appreciate businesses that have a clear plan for their future. Not understanding your business plan can be aseptically damaging when you go in to discuss your loan. After all, you’re going to be spending the money that the lender lends to you. If you don’t have a clear business plan or seem lost as to how you’re going to spend the funds, your small business loan is more likely to be rejected. To give you an idea of the kind of plan the lender might want to see, here are just a few things you should have:
– Projected financials in the future
– Company description that outlines what your business does
– Facilities and operations plan that clearly outlines what you do
– A solid description of your management team or even representatives who can outline their management operations
– Marketing strategies to show how you plan to generate sales now and in the future
Apply For Small Business Loans
Small business loans can give you the cash you need to grow your business, but you need to have a clear plan for how to use your loan proceeds. Make sure that before you apply for any loan, you’ve examined your credit scores and reports, detailed your business model and plan both now and in the future, and gathered all of your important documents. Doing these things will help you be more likely to qualify for the loan you want.