5 Steps to Take When Applying for a Business Loan

In the modern business world overburdened with numerous competitors and a never-ending struggle to maintain solvency and establish your company’s success in the market, business loans have become a necessity. Lenders provide the necessary support small businesses and start-ups need in order to get off the ground, kick-start their projects and ensure their solvency in the years to come.

Plenty of factors will determine the amount, type and limit of your loan, and while economic factors and socio-political fluctuations are out of your hands, there are five key steps you can take to ensure a successful loan application process.

Define your loan purpose

Professional lenders will put their trust and thus, their monetary assets in a company that has a clearly defined purpose and business plan. You need to articulate and define your loan purpose in a way that is not only concise and clear, but that will also allow the lender to reach a quick, positive decision.

Are you developing a new product, or are you launching your company? Are you venturing into new markets, and if so, how do you project new demographic flows? These are some of the questions you need concrete answers to in order for the lender to justify their loan.

Established businesses are more likely to have a clear loan purpose, while start-ups can experience trouble in defining what the loan is actually for – is it to hire the necessary staff, or to execute a marketing strategy, or is it to pay for your offices?

Assess your loan amount

While lenders will assess their preferred loan rate based on the prospective client’s credit score, you also want to have your own, detailed projections stating the amount of financial aid you consider to be necessary to execute your business plans successfully.

Remember that you are working with financial specialists, and you’ll need to present a strong case to justify the amount you are asking. Therefore, you need to prepare your financial statements as a part of your detailed business plan.

Review your credit history

When applying for a loan, it’s important to review your personal and business credit history in order to rectify any errors and present the lender with a positive credit statement. Acquire a credit report from each of your credit agencies and review them thoroughly so you can ask for any errors to be fixed before applying. You can also file a credit dispute report if the agency denies your request.

Assess your credit score and lending options

Professional lenders can give you a free quote based on your credit score and the type of loan you are applying for. A positive credit score plays a pivotal role in landing you the best loan option possible, and it can be assessed by reviewing your credit history so the lender can assess your creditworthiness. You can get in touch with companies such as NSW Mortgage Corp to get a free loan assessment and determine the actions you need to take to get a loan.

Free assessments are the best way for a business owner to gauge their current standing and improve their operations. Whether you’re applying with a bank, a private lender or an alternative borrower, you want to increase your credit score in order to raise your credit limits and get best interest rates.

Present your case

An effective presentation can mean the difference between a loan and searching for another lender. You want to present a succinct, concise and organized case for the loan officer to review and consider. Along with an engaging presentation entailing financial statements, graphs, charts and spreadsheets, you want to create an effective executive summary, allowing the lender to consider your case based on several key points that will highlight the positive aspects of your application.

Business loans are a godsend for entrepreneurs and small business owners around the world, allowing companies to maintain solvency and plan for the road ahead. Follow these five steps and you will develop a strong plan of attack that will increase your chances of receiving your loan and establishing long-term success.