Convincing a lender to approve your loan
A startup loan may be a viable option for those that wish to get their business off the ground. These loans are used for brand-new businesses, as well as those that have been up and running for short time. Traditional business loans are usually reserved for companies that have been operated for at least two to four years.
When you prepare to meet with a lender, it is important to show proof that you are a good candidate for a loan. This does not mean perfection; however, they want to see growth. This includes both in your business and personal life. It is pertinent that your lender believes you can make a commitment to paying back the loan.
Show progress
It is important to show progress, again both personal and business wise. Gather documents that represent what you have accomplished since you started your business. You can show an improved credit score, increased business revenue, or an improved business plan. The lender wants to see that you are moving forward somehow. If your business endeavors are on hold until you can get a loan, show proof that you are working elsewhere to make money while you wait. Startup Loans are meant to help you start a business from scratch, at times. You can show personal progress if there is little to show business wise.
Prove interest in your product or service
A lender may be unaware of how lucrative your business can be. Take in some statistics on similar businesses that are successful. You also want to show that others are interested in your product or service. This lets the lender know that your revenue is going to be steady once the startup is funded. It is a good idea to start a business website when you first start your business. Link social media accounts to this. You must get the word out about your business. This brings in interest, and eventually, customers. Encourage interactive comments or reviews on your website. You can easily show a lender how popular your service is by showing positive reviews and comments
Provide documents of business income, as well. Some lenders may only be interested in the numbers, so have them ready. This can include a graph that shows the financial growth of your business on a proper timeline. If you already have investors, or some show interest, also provide documentation of this. Again, your lender needs to know that people are interested in what you have to offer.
Decrease your debt
No matter how much progress you have made with your business, if you have heavy debt you may still be denied. in theory, you need to fund your business to make money to pay down the debt. Some lenders, however, view this as a downward spiral. If you have outstanding debt, get started on paying it down. If your credit score is not reflecting your efforts, it may be worthwhile to hire a credit repair specialist. This can often make a difference on your credit much faster than working at it on your own. You may also be well received if you can show that you recently paid off a large purchase, such as a car. This shows that there is more room in you budget for repayment of the startup loan.
Before you apply for your startup loan, take the time to assess your financial situation and your credit score. Start the repair process as soon as possible, if necessary. Even eliminating one or two monthly bills can make your finances look better. Also, be ready to show your lender how you have grown over the years. If they see a major credit score change, they may realize you are ready to commit. You can also provide documentation of regular payments to credit agencies or towards other bills. Be sure to provide documentation that shows your business growth patterns and interest from customers or investors. Take the time to speak openly about your plans and needs to fulfill them. Back this up with a detailed business plan. Proper preparation can help you secure a sizeable startup loan.
