No business owner wants to have their loan applications turned down by a bank. So how do you perk up your chances of obtaining the business loans you seek?
1-Review your business credit report
Most business owners forget that their business credit profile determines whether their applications get accepted or rejected. Follow up with all three credit reporting agencies— Equifax Small Business, Experian Commercial, and Dun & Bradstreet (D&B) to check if your firm is listed— and to review your credit status.
You will need to pay some fee to access to your business credit info, but the charge is worthwhile because you not only learn where your business stands but also get the chance to identify and correct errors that could hurt your business’s ability to get bank loans.
Business credit scores are based on factors like how long you’ve been up and running, and the amount your company is carrying in debt. One perfect way to boost up your business credit score is to pay back all your creditors on time.
Lastly, monitor your personal credit the same way because some lenders look into that when assessing your creditworthiness.
2-Go to the right bank for the right loan
Banks have lending terms that differ widely. While some will gladly offer you loans without requesting for guarantees, other banks will ask for assets like real estate to secure their finances.
Other banks have also chosen to dedicate their loans to supporting specific industries. Big banks feel comfortable dealing with larger companies, while community banks prefer lending to smaller companies.
After learning the right lender for your space, make sure to find out what business loan will best meet your company’s needs.
Small business loans are classified into; government-insured and conventional. A conventional merchant loan is often more demanding because they have strict requirements and restrictions like keeping minimum cash reserves, and pledging deposit accounts as collateral.
In comparison, government-insured loans offer more flexibility. For instance, Small Business Administration (SBA) 504 and 7(a) loans are said to have better terms. These loans can provide quick, easy, and cost-effective financial solutions for your small business.
3-Form rapports with the right banking officer
Be sure to meet and review your loan status with your lending officer at least once every quarter. Don’t wait until you hit rock bottom only to surprise your banker with your poor financial situation. A banker is more likely to do work with you if they know and trust you.
Banks are more willing to do business with well-prepared, savvy business owners. These steps can help you become one of these savvy customers.
Author Bio: As the FAM account executive, Michael Hollis has funded millions by using merchant loan solutions. His experience and extensive knowledge of the industry has made him finance expert at First American Merchant.