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How to Improve Your Chance of Getting a Small Business Loan

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Whatever kind of business you have decided to start, chances are that getting it off the ground and propelling it towards success is going to need some funding. However, getting a loan for your business isn’t always easy, especially when you are just starting out. If your business is brand new and has no financial history to speak of, this lack of records can easily stand in your way when applying for loans from banks and other small business lenders. Getting a business loan can be a frustrating process, but the good news is that there are several things that you can do to boost your chance of acceptance.

Pay Off Existing Debts:

First of all, if your business has any existing debt, this will be one of the things lenders look at when determining whether or not you will be accepted or rejected for funding. Any previous business loans or money owed on a business credit card will be taken into consideration in order to determine whether or not the repayments for the new loan are going to be affordable for your business. If this sounds like your situation, the best thing to do is to pay down existing debts as much as you can so that lenders can see you are a responsible business borrower.

Improve Your Business Plan:

If you are getting rejected for a business loan, your business plan – or lack of business plan – could be to blame. If you haven’t written a business plan yet, your chances of getting funding are going to be very slim since this is a key document that lenders will look at in order to determine whether or not lending to your business is going to be worth it. A solid business plan shows potential lenders that you know what you’re doing and how you’re going to go about it, making it easier for them to determine your level of risk.

Improve Your Personal Credit Score:

If your business is brand new and hasn’t got any financial records as of yet, lenders are very likely going to examine your own personal credit score as the business owner to get a clearer picture of how you are likely to handle business finances. If your credit score is poor, this will stand in your way when applying for business finance since lenders will be reluctant to provide business funding to somebody who has had trouble managing their personal finances. Spend some time paying off personal debts and improving your personal credit score before you apply for a business loan.

Choose Your Lender Carefully:

Opting for the wrong type of lender is a surefire way to get rejected for a business loan. If you’re just starting out and only need a small amount of capital, for example, there’s a big chance that the banks are going to say no, but you could have more luck with an online small business lender. Do your research and apply to lenders who are most likely to work with you.

Getting business funding isn’t always an easy task, but there are several strategies that you can take to improve your chance of being accepted.