Since the Global Financial Crisis, traditional lenders has placed more restrictions on loan applicants, which have decreased the number of small businesses that are approved for loans. According to a new study from Dun & Bradstreet and Pepperdine University, over a 3 month period, only 38 percent of small business that applied for bank loans were approved, in comparison to 70 percent of mid-size businesses. The following are some important steps to complete before applying for a small business loan.
Keep Your Finances in Order
Before you ask for a loan, ensure that your finances are in order. Lending institutions want to be able to review your financial records easily and will not lend to a disorganized or dishonest applicant. They will review current accounts, future financial projections, tax implications, and your personal records to determine if your business is a good financial risk.
Have All Business s Data Available for Review
Nowadays, lenders want to see more than personal or business accounts before lending money. Many online lenders, like Kabbage, use automated platforms to analyze information from various sources. Their systems scan diverse data points including: social media accounts, shipping details, e-commerce platforms, and other sources to get a better snapshot of a ventures financial stability.
Write a Detailed Business Plan
Having a business plan is critical to attaining a loan. Not only will lenders want access to your current accounts and future projections, they’ll also need a solid business plan that makes them feel like your business is a solid risk. A business plan is a collection of documents that act like a road map for your company. A comprehensive plan includes: research on your competitors and target market, mission statement and business goals; estimated sales, data on the loan amount needed, plans for its use etc.
Research Lenders before Applying
Research lenders before submitting an application. The type of lender you apply to will depend on how much cash you need, how quickly you need cash, the reason for the loan, your credit history, and business experience. Always read the fine print before signing a contract, as some loans come with high interest rates and commitment terms that may not be compatible to your needs.
FAM is a veteran business cash advance organization that helps businesses like yours achieve success. Our acclaimed loan program has a simple application process designed to get you critical small business funding in less than 72 hours. Applicants need not supply any tax returns or financials. Contact us now to start your application.