Think Like a Banker To Get Approved for a Small Business Loan
You have a great idea for a new business and just need the funds to get started. Unfortunately, you may soon find out approval on SBA loans can be difficult to achieve without a bit of extra effort on your part. Your approval odds will increase if you flip the script and approach your application process through the eyes of the banker instead.
Take Steps To Improve Your Credit Score
The banker will take your personal credit history into account when assessing your risk level for a possible business loan. Take any necessary steps to improve your credit score to at least 720 before you start the loan application process. Make it a habit to pay your personal bills on time, as that is one of the biggest factors in your credit score. It also increases if you use a low percentage of your available credit line.
Create a Solid Business Plan
Every great business starts with a solid plan. Sharing this plan with the banker shows him or her exactly where you will spend the money you will receive. You have a greater chance of approval when the funds go towards expanding your business, purchasing inventory, making capital investments or hiring additional employees.
Get Expert Advice
Bankers are always impressed when you show that you created your business plan after meeting with your accountant and financial advisor to get their expert advice on the financial needs of your new company. This shows that you have taken the necessary steps to look at your business from several different angles and increases the banker’s trust that the loan you are requesting will achieve your goals.
Stay Organized
Believe it or not, bankers view your organizational skills as a key factor in the approval of your loan. Having all your documentation ready and available and fully completing all of the pages of your loan application shows that you stay on top of required details. Quickly producing any information your banker requests in the future demonstrates your high level of efficiency as well.
Allow Enough Approval Time
Don’t put off your loan application until the last minute because the approval process could take several weeks or months to unfold. Start the application process as soon as you have your credit score repaired and your business plan in place.
Approval for SBA loans is easier to achieve when you think like a banker during the application process. Following one or more of these tips will help you show any banker you are serious about your new business and worth the loan risk.
