A business requires capital. Many new entrepreneurs don’t have the funds to meet all their business expenses so they apply for a business loan. This article gives 7 tips business owners can use when they are applying for a business loan to increase the chances of having their loan application approved.

Starting a new business, even a home-based one, requires considerable capital. Since many new entrepreneurs may not have the necessary funds to cover all the initial business expenses, most of them opt to apply for business loans from the bank or other lending agencies. While the business loan application process is relatively straightforward, the chances of getting approved aren’t always as good as one may think. However, there are certain things you can do to increase your chances.

1. Prepare a concise but complete and convincing loan request. This request should include a brief summary of your business plan, your projected output, and an overview of your credit history. It should also include details as to how much you want to borrow, as well as your intended method of paying it back.

2. Show up for your initial meeting in roper business attire and with complete documents. If the lender is impressed with your loan request letter, you’ll be scheduled for an appointment. For this meeting, bring with you all the necessary documents to make an excellent presentation.

3. Lending agencies will not just give their money to anyone who submits a loan request. You’ll have to further convince the lender that your business is worth investing in by showing your personal and business tax returns for the past three years, as well as your recent credit reports. Of course, it wouldn’t help much if these reports show poor performance on your part so you’ll also have to keep all your taxes and credit payments updated at all times.

4. Be prepared to answer the lender’s questions. In addition to bringing all the necessary documents, you’ll have to prepare intelligent answers to whatever questions the lender may ask. For instance, you’ll have to give viable explanations for any late payments that appear on your credit record, or you should be able to thoroughly explain how you plan to pay back all the money you are borrowing.

5. Sometimes lenders will ask questions that you don’t expect and that will catch you off guard. You can’t really blame the them because they only want to find out everything they can about your business to determine whether it’s worth their money. To help you prepare for such unconventional questions, take your time during your preparations and even to ask other business owners you know about their own loan application experience.

6. Offer good collateral. Most lending agencies require their borrowers to present some kind of collateral before granting a loan request. Unfortunately, many starting entrepreneurs don’t have a lot to offer and they end up listing their homes and other important assets as collateral. This is absolutely a very risky move and should only be done if you’re fairly certain your business will eventually succeed.

7. One of the most important things that a lending agency is looking for in a business is stability. For this reason, most lenders will deny your application if your business has only been running for less than two years. However, there are some lenders that will grant your request even if your business is quite new. Furthermore, there are also lending agencies that give special preference to women and minority groups so if you fall into those categories, it’s an option you should check into.

Author Bio: Bruno is a web entrepreneur and social media marketing consultant working for the Norwegian dog community website Hundefeber.no. He also owns a lovely Pomeranian and a Mops dog.

Category: Finances
Keywords: business,finance,finances,money,loan,money