Many new business owners require a business loan to help them get up and running and in order to get a loan, you’ll need to be prepared for your meeting with the loan officer at your local bank. Here are some things you’ll need in order to get the best business loan.
First, even if your business is nothing but an idea in your mind, you’ll want to make sure that your credit is good to excellent. It’s certainly possible to get business loans with bad credit, but you won’t get as low of an interest rate as someone who has a credit score that’s in the upper 700s or above. If you have no idea of what your score is, find out and then check over your credit reports with each of the three credit reporting bureaus to make sure that there are no errors and dispute them right away if you find any.
If your credit is not good, make sure that you are paying your bills on time, pay off your credit card balances to lower your debt to income ratio and close out some cards if you have in excess of five or six. Having too much available credit, in comparison to your income, can hurt your score. Remember to never get rid of your oldest credit card, opt for a more recently acquired one, so that the length of your credit history remains the same.
Another thing you’ll need is a solid business plan which states how you plan to run and grow your business. If you’ve already started, give accurate metrics to show how it’s going. Show that you are thinking long-term by giving predictions for future growth and expansion, explaining how you’ll get to that point. While it’s good to show your optimism, lenders will also be glad to see that you have planned for difficulties and set-backs. List some obstacles that you might run into and what you’ll do to get past them.
Additionally, lenders like to see that you have back up funds, like a mortgage or emergency fund, that will cover loan repayment if times get tough. Having a good reputation is also important, so try to work with your bank or one where a friend works so that a good word can be put in for you.
Take plenty of time to prepare for your meeting with the lender. The more information you can provide them with, the more likely you are to be approved for a loan without hesitation from the lenders.