If you have a company that will need to borrow money in the near future, it is important that you prepare for the process. You’ll want to get your finances in order, as well as your credit. We’ll go over some of the details of what you should prepare, in today’s article.
One of the strongest determining factors on whether or not you get a business loan is your personal credit. Although your company has its own credit score, it is an incomplete picture. Most banks will do more than just look at your score. They’ll also look at your report to see what types of items you’ve been late on.
Any missed mandatory payments, such as car payments or home payments, will particularly raise red flags. Therefore, make sure to pull your personal report at least six months in advance to check for potential problems and errors. Do this again within one month of your application.
You’ll also want to have the best revenue-to-expense ratio possible. This ratio will determine the amount you are allowed to borrow, if any. Also, you’ll want to cut your mandatory monthly expenses, if at all possible.
Finally, you’ll want to prepare all your business paper work. You’ll most likely have to furnish proof of income, as well as your revenue, profit and loss statement of account.
This is just an overview of the business loan planning process. For more exact details, you should contact the loan department at a bank you are considering using to ask them what additional requirements they have.