3 Steps to Great Business Lending Shape

Almost every small business needs to obtain outside financing at some point or another. However, it is well-known fact that securing a business loan is not an easy task. According to an article published by Fundera, approximately 80 percent of owners of small businesses get rejected when they apply for a bank loan. Getting into good lending shape is not a surefire way to get your loan application approved, but it can certainly turn the odds in your favor. Here is a look at how you should prepare yourself before applying for a business loan.

Be Well-Prepared

In most cases, lenders will look at a number of things when they are determining your eligibility for a business loan, including time in business, cash flow, collateral, and credit score. The longer you are in business, the better your chances. If you are just starting out, it is a good idea to incorporate your business before you apply for a business loan. As for cash flow, lenders will evaluate your company bank account’s inflows and outflows, including average daily balance, deposit volumes, and number of non-sufficient funds. Make sure all your financial records are accurate and updated.

Also, lenders need you to provide collateral so that they can be sure they can recoup their costs if you default on your loan. As such, you need to document all your assets, including property, equipment, and other things, as well as the value of each asset. Lastly, your personal credit score is an important consideration for lenders, because it reflects your overall financial management ability. If your credit score is less than impressive, it may be worthwhile to work with a credit repair company. One way to find a good credit repair company is to read a review such as the feedback for the Lexington Law Firm or Credible.com.

Submit a Complete Application

Lenders will review your application very closely, looking for omissions, discrepancies, and other reasons to reject your loan application. To increase your chances of success, you have to make sure that you provide all the necessary documents, including:

  • bank statements for the past three to six months
  • profit and loss statements for the past two years
  • tax returns for the past two years
  • information on debts, including liens, leases, and credit adjustments
  • letter of explanation to explain why you need financing

Choose the Right Financing Option

Many business owners think that the best loan is the one with the lowest rate, but that is not always the case. You should also consider the size of the loan, repayment term, payback amount, and speed of funds transfer. To find the right financing option, you need to spend some time doing research and comparing financing deals offered by different lenders. And based on the finding, you may consider approaching financial service providers like Coastal Kapital or similar firms which can offer you competitive rates, flexible payback terms, and fast loan approval. With these available options, you can choose the loan plan that would be feasible for you.

There are many lenders in the market who can fund your start-up. You may just need to prepare your documents as required by the lender you selected. By anticipating and reviewing the lender’s profile, your chance of getting a loan could increase.