It’s not a secret that getting a business loan for your company is a difficult task. In today’s economy, banks make it nearly impossible to get a business loan.
More than half of business owners that apply for a loan don’t get it.
We work with business owners every day that experience this. There are many alternative business loan companies that can get you the funds you need for growth, but you still need to have a good standing credit to back your claim.
Before you start applying for loan after loan, here are some foolproof tips to help bring your business’s credit where it needs to be and keep it there for good.
1. Meet With a Financier
Meeting with a financier regularly will help you stay on top of your finances. Building a strong relationship with a financier or mentor will help you increase your business’s finances. You will have someone to look to when you need financial help and someone to compare your business to.
When researching a financier to partner with, search for those that have worked with business similar to yours. This way, they will be more likely to understand what your business needs in order to succeed, financially. An experienced banker in your industry will be able to help you find the right financial products for your exact needs.
Beyond meeting with a financier, you should make it a point to subscribe to business financing tips, blogs, publications, and other feeds. Hearing from business owners, like yourself, work through financial problems and provide helpful tips to come out on top is a great tool.
2. Take a Look at Your Full Financial History
When you apply for a business loan, or any type of loan, a bank or loan company will not only look at your business’s financial standing, but also your personal finances. Lenders judge whether or not to grant you funds based upon these reports. As you may know, low personal and business credit scores are the primary reason that business owners don’t qualify for loans.
It is important to approach improving your personal credit as your business credit. It doesn’t matter if your business has stellar credit, if your personal credit isn’t up to snuff, a business loan company will look the other way.
Make strides to improve both lines of credit before you start shopping for business loans. This way, the loan company will see you at your best, rather than struggling to stay afloat.
3. Set a Strict Budget
We know that business planning is not always a business owner’s favorite way to spend their time, but it is crucial for growth. Take a step back from your business to fully understand your finances. Take the time to sit down and go over every aspect of your business to set a proper budget that you can, and will, actually stick to.
Budgeting is a great way to start building a strong source of capital. This will help you pay off debts faster and, ultimately, help get you approved for a business loan faster.
4. Start Small
Before you meet with a business loan company for a loan of over $500,000, consider starting small. Small business loans, rather than large business loans will allow you to better manage your finances. You will be able to pay on time, build a stable credit, and heighten the chances of future financing for larger loans.
Taking more money than you can reasonably afford is one of the biggest mistakes that we see business owners make. To have the best success with business financing, start small.