Are you just starting your business and in need of added capital? Do you want to expand on your already growing business? Does your equipment need improvement? Is your business in need of added cash flow? If this is your situation then you are probably looking for some tips on how to help you get that bank approval for your business loan. Search no more as I give five tips that can surely help you in getting that much needed financial aid.
1. Present your Business Plan
With the high mortality rate of small and medium businesses today, is it any wonder that banks have become wary of approving business loans? With stiff competition for that business loan, how can you make yourself stand apart from the rest? The key is to prepare an excellent business plan. This includes having a brief executive summary of your business plan followed by the more detailed information about you and your business. Make sure you include the nature of your business and the service or product you offer as well as your sales and strategies. Bear in mind that your audience may not be familiar with your business so you must introduce it accordingly including who your competitions are, your target market, your business aim, personnel, and your projected financial outcome. You may also want to present a projected balance sheet. Be realistic about how much your business can actually earn in the future.
2. Good Credit Record
Having an impeccable credit record is probably one of the best things that you could do to persuade the bank to approve your business loan. Your credit record shows how you are as a borrower and how responsible and prompt you are in paying your debts. These are factors that are important with financial lenders as they are more prone to turn down business loans that have a record of not being able to pay on time.
3. Enumerate All of Your Assets
Providing the bank an accurate enumeration of all your assets is also an important factor in getting that business loan approved. The more assets you have the more security you can give for your debt and the higher your chances of getting approved. Since banks are risk averse, the greater collateral you can show, the lesser risk you pose as a borrower. Listing your house as a guarantee is also an excellent way for your loan to be approved. Other assets that you can list are vehicles, real property, stocks, bonds and cash. Be careful what you include as they may all be taken by the bank to answer for your loan in case you default.
4. Give a Detailed Allocation
Making a detailed allocation of where you will use your business loan can help in improving your chances of getting approved. It will show the loan officer where you will use the money and at the same time present options on how the bank can get the money back in case of default. For example you can say that you will use 50% of the loan for equipment. In case of default, the bank can take the equipment to answer for your debt.
5. Present a Good Income Record
In going to the bank, having your old income tax returns can be helpful. Show these to the loan officer so as to demonstrate your financial history and your capability to earn money.
