Applying for a business loan can feel intimidating. But if you have big plans for a business that you’re genuinely passionate about, it will feel so rewarding in the end. To help ease all worries, here are the four important steps when preparing for a business loan application:
Prepping your finances
Starting the application process is a lot easier than most people think. There are two important things to remember: organizing your finances and understanding which options you have. Luckily, the U.S. Small Business Administration created a loan application checklist that’s used as a guide for collecting everything required. It’s also essential to know the different types of business loans available and which ones fit your needs.
Choosing which bank to apply for
Thanks to the advancement of technology, entrepreneurs searching for a bank has gotten the option of doing it online. Although it seems like an easier option, personally, going to the local bank can be cheaper. Though both options have different benefits, the important question is whether you can qualify for a bank loan and how fast you need the money. Be sure to ask yourself both questions before committing to your choice.
Think like a lender
Every lender has their own criteria, which they use to underwrite. The different factors they consider are the purpose of the loan, the amount, annual revenue, credit score, bank balance, and the profitability of your proposed business. It’s best to foresee all of these factors before you get a plan so that you come prepared and have a higher chance of approval.
Follow best practices
Another important step is to intensely review the business loan application fully. Remember to keep in mind important points like being detailed and accurate with every bit of information you’ll provide. Lastly, never delay in providing follow-up information because you want your lenders to know that you are still interested in pushing through with the loan.
