If you are planning to start a business or you have a start-up you want to expand, borrowing money from the bank and other financing firm is a must. These is where you get the money to save enough money for your business plan and make sure that it can sustain for a long time. With enough money you can grow your start-up to a successful company with loyal customers and established brand name.
Borrowing funds, however, is not easy. Since you are a small company, you have not yet established a credible name. Hence, the bank will be strict in approving your loans. There is a chance that the lender won’t side on your favour. To help you get faster approval from banks and other financial companies, here are some tips that you must follow:
1. Build an excellent credit report
If you don’t already have a credit background, start building one now. It is said that it is better to have a bad credit history than having none. Banks and other lenders use this as basis when assessing your loan application, so if you don’t have a credit data, they could not assess your credit score and assume you can’t properly manage your finances. Credit cards are usually the basic products you can acquire as an individual. It’s easy to get one but be sure to pay on time and in full all the time to get an excellent credit score. Remember, even personal credit cards can be accessed by banks for verifying your credibility to pay.
2. Improve your credit history
If you happen to have late and minimum payment issues on your credit card, you can still improve it by catching up to pay on time after those issues. Paying on time in the long run can bring back the positive report on your credit background. On the other hand if you default on credit cards before, be sure to pay it before trying to apply for a loan and get the certification of full payment from the creditor. If requesting for certification means calling them every day for follow up, do so to save yourself from the issues you’ve had with creditors. Disregarding this could hinder you from future loans you want to apply for.
3. Research for the best rates
Before approaching a particular lender, research for the best rates for small businesses first. Consider the repayment rates and terms and how it will affect your cash flow. You can then tailor your application based on their criteria.
4. Compile all the documents needed
Once you found the potential lender, gather relevant documentations to support your application. This can include the business plan, revenue and profit projection, tax return, competitor analysis, business insurance policy and many more. For some lenders, there could be lesser documents to prepare. For instance, Kikka’s small business loans do not require the applicant documents like bank statement and tax return.
Getting any loan whether big or small has a lot of requirements. But understanding the business loan procedures and processes can lead to a successful funding for your small business.