Work On Your Own Credit Score
One of the surprises for some people when getting a small business loan for the first time is that it’s all based on your own credit. No matter how good your business plan is, or how sound your strategy, it all comes down to your credit score. Spend some time in advance working on your credit. This may take several months or even years to get your score built up to where it needs to be.
Pay down your debt as quickly as possible. Keep using your credit accounts, but pay off the balances each month. Having a successful track record using credit is one of the most important things that affects your score. Having less than about 30% of your available credit used up is key as well.
Get a copy of your credit report and look for errors as well. In many cases, people find errors on their reports and getting them removed can make your credit score jump substantially.
Get All Your Documents Together
Before you try to obtain small business loans for Realtors, it’s important to make sure that you have all of your documents together. If you walk into the bank for the first time and ask for a loan, you don’t want to look unprepared. The first impression you make with the bank is hard to overcome if you don’t do well. Have a personal financial statement, income statement for your business, balance sheet, the last two year’s tax returns and the articles of incorporation for your business. Most of the time, you should also have your tax ID registration handy. The lender will often want to see your business license and also some form of identification.
Have a Business Plan
Creating a business plan is essential when it comes to getting a small business loan. A business plan is a type of living document that you create when starting a business that outlines your entire plan. It shows how you plan to run your business, what makes it unique, and what gives you a competitive advantage. You’ll offer financial projections, show expenses, and industry analysis. Even if you aren’t completely clear on every detail of how your real estate business is going to work, it’s important to get a business plan together. The lender will like the fact that you’ve put thought into every contingency and documented it for them in an easy to read format. Reality will not go exactly according to your business plan. However, you can change it as you go and adapt to the situation. The important thing is that you attempt to plan.
If you can walk into a lender with some kind of collateral to offer, your chances of getting approved for a loan will increase drastically. It could be real estate, inventory, equipment or something else with tangible value. The bank will feel better about things if they know there is some chance of recouping their money if you are unable to repay the loan.
Overall, getting a small business loan isn’t always easy. However, if you are flexible, willing to listen, and willing to keep trying, your odds of success start to improve.