Improve your chances of obtaining funding
It’s important for lenders to know their investment in your business is a good investment. Newer businesses don’t have the history to show they are a strong investment, and often businesses are looking for funding due to unforeseen circumstances, so what can you do to improve your chances of obtaining a business loan with the best terms possible?
Write a business plan
Even for established businesses, writing or updating your business plan is important for you, as well as the lender to see. A business plan should include your mission, goals, products/services, expected revenue, how you plan to reach your revenue goals, integrate the loan amount you’re trying to obtain, and describe a payback plan.
Improve your credit
As with personal loans, business loans are also greatly affected by credit score, but if you have business partners, all of the partners may affect your chances of qualifying. Ever member should review their credit score and history, with a free service such as credit karma, and try to eliminate anything that is negative or inaccurate. Do what you can to reduce your balances and make timely payments over 3 months.
Explain past problems
Investors are aware people and businesses have unavoidable issues, which may not be reflective of how the business or your personal life is typically managed. If you have had issues, you should write up a summary of the circumstances and any evidence of, and how you are overcoming those issues. Most loans do not take this into considerations and simply run it by the numbers, but some loans will take this into consideration. Most importantly, if a lender feels you have intentionally hidden a past issue, you will be rejected for funding and not given an opportunity to explain, so being upfront, and explaining the cause and resolution of the issue allows your story to be weighed in from the beginning.
Be meticulous with accounting and banking
Most lenders will want to see your last 3 months of financials and bank records. These records should be easy for a lender to review and confirm. Having a positive bank balance is also very important during this time; even if you are in a tight financial spot, do what you can to keep a few weeks worth of expenses in your account.
