In our previous post, we talked about three helpful tips to help you secure loan for your small business. This is a continuation of the discussion. Here, we decided to offer you three more business tips to help you secure the bag in the bank/alternative lender.
Tip 1: You Need to Agree on How Much Funds You Can Invest in the Business You’re Operating
Whether you know this or not, you need to know now that 99% of lenders will require that, the owner of the business put a chunk of their own money into the business which they seek a loan for…
Putting your own money in the business is a sign that you believe in the business idea enough to risk your own funds by putting it in it. Note that, no business loan giver will give you 100% of the financing you discussed in your business plan. They may give you up to 80% of the fund described in your business plan – you will cover 20% or more not given.
Actually, up to 20% of the business funding should already be invested in the business at the time of applying for a small business loan. This can be likened to down payment for a home before taking out a home mortgage. The more you pour in your personal money in the business, the more likely it is for loan givers to consider your request and possibly, approve it.
Tip 2: Gather Your Docs and Ensure They’re Updated
This may not be an interview for a job, but lenders will want to look through your work history. Your professional work history helps demonstrate that your experience, education, and accomplishments have set your foundation as a prospective successful business owner.
The thing is, if you appear more professional, your chances of getting a business loan increases. Other docs may be included to solidify your loan application. Documents such as bank statements, balance sheet, personal and business tax returns, mortgage or lease documents, articles of incorporation, commercial licenses, and any valid means of ID.
Tip 3: List Your References
Personal references can be included in your list, but including a number of business references will be nice as well. Clients, vendors, supervisors, and even past colleagues who can vouch for your business and/or you can be listed amongst your business/personal references.
Bear in mind that million of businesses exist in the United States. Whether your idea succeeds or fails depends on how prepared and committed you are. We can’t deny the existence of luck in this because you may be needing it too.
Lenders are here to help you succeed in your endeavors but you need to put in effort by meeting their requirements. The tips and guides listed in this article and the previously posted one should be enough to help improve your chances of landing a small business loan.
Our next post will talk more on the things you need to checklist before seeking a business loan from banks or any lender out there.