Getting a Small Business Loan Can be Difficult
Everybody knows that the obtainment of a small business loan can be quite a trying experience. The first loan is always the most difficult to get but here are some tips on how to ensure that your chances of getting the small business loan that you need increase.
Tips that Can Help Your Loan be approved
Tip Number One, a loan is primarily dependent on establishing a good relationship with the banker. A good relationship is vital as if you have a friendlier relationship with the banker then there will be an easier free exchange of information and knowledge. As well as the ability to see that needs for the loan are met.
The first step to developing a good relationship with a banker for the purpose of achieving a small business loan is to set up a bank account at a bank that primarily deals with the sort of small business that you wish to open.
The second step is to make sure that you routinely manage and keep track of your account to avoid bounced checks, a low balance and the ever painful overdraws.
The third step is you can borrow a short-term loan and then make sure to quickly repay the loan so you can establish good business credit which will increase your chances of an approved business loan in the future.
The forth step is that you should always keep your bank informed as to any impending issues that may arise such as possible missed payments and missed projections.
You should also try to get to know your banker and give them a clear idea of what your small business will be like.
Tip Number Two. Always be prepared for any questions that may come your way. You want to show bankers that giving you a loan is a low-risk proposition. You should also have your loan application filled out and ready along with financial statement projections which cover at least three years, copies of cash flow amounts and a professional looking cover letter.
You should have your answers already well thought out and think about and research the most commonly asked questions by bankers such as:
How much money do you need?
How long do you estimate you will need the loan for?
What are you going to do with it?
When asked these types of questions you should be as precise with your answers as possible. You should also be prepared to go into detail about the exact reason you need the money and what it can do for you and why they should take a risk on your business. When asked what you are going to do with it make sure that you give concise details that leave no doubt or worry in the lender’s mind.
Tip Number Three, ask questions. The banker should see that you are just as interesting in the finer details of the loan as they are. You should show them that you want to be well informed on all matters.
They are not the only ones who get to ask the questions. Prepare a few of your own that will show your initiative and keen interest in future business success. You should appear confident and engaging as a borrower who possesses these qualities is typically 4 times more likely to be approved for a small business loan.
Tip Number Four, you should map out a precise and detailed cash flow repayment plan and time frame to better convince the banker that your business has the potential for long-term profitability and that you will be able to repay the loan due to the efficiency and details of your business plan and overall financial projections.
Tip Number five, you should possess a positive attitude. Do not show up with a negative attitude like you have already been denied approval. You should present yourself as a positive and reliable entrepreneur. Keep the negative energy at bay even if you are anxious or worried about your chances.
Tip Number Six, do not lie or stretch the truth. You should not make vague statements that you know are not true; these should be avoided at all costs as the lender can easily do some fact-checking and expose your lies. So make sure everything you claim can be factually supported.
Tip Number Seven, dress in professional attire. Show up well groomed and dressed like you are already a successful businessmen. Do not dress like a needy beggar or someone who does not take care in their physical appearance. You should make your outward appearance a reflection of your attention to detail and commitment to excellence.
Tip Number eight, make sure that you have your pertinent documents ready and that they are well organized and easily accessible. Make sure all loan documents are typed rather then written by hand, as this appears more professional.
Tip Number Nine; do not get pushy with the lender, often pushy over-abrasive attitudes are met with rejection. So do not let your desperation turn to anger.
Finally Tip Number Ten, you must be willing to discuss the possible risks of your business. If you choose not to then the lender will see this as negligence on your part. They want to know that you have a plan for risks that may come. No small business is exempt of risks.