How to Qualify for a Business Loan

The economy continues to recover and grow. Entrepreneurs are turning to banks and other sources to expand their businesses to meet their customers’ demands. Most banks have reorganized their lending criteria to better assess business loan proposals, making it harder for business entrepreneurs to qualify for a loan. It may be quite hard to get a business loan, but it doesn’t mean that you cannot qualify for one. There are some tips that you can help you increase the possibility of getting a business loan.

Compelling Presentation

Aside from a practical and clear proposal, you need to have a compelling presentation to persuade the bank to approve your loan application. Bankers don’t like loan inquiries as they are not organized and have no particular focus. Bankers assess more than a hundred deals every week and most are walk in customers or irregular phone calls that ask loosely about loan possibilities without any strong basis of conversation. Organized and clear paperwork is needed to get the banker’s attention and improve your chances of getting approval as well as speed up the entire process.

Existing Banking Relationship

Having an existing banking relationship can help strengthen your loan proposal. You can increase your chances of getting a business loan by applying with a bank that offers either business or personal checking accounts. Banks charge more interest on loans than they do for deposits. When you apply for a bank you already have a deposit with, you can get some benefits. The bank can make exemptions to their lending policies based on their length of relationship with you. Anyone likes to do business with someone they know, trust and like and it’s the same for banks.

Practical and Clear Business Loan Proposal

You need to show a practical and clear business loan proposal if you want your loan to get approved. Bankers receive a lot of business loan requests every day. They may not admit it, but they love getting practical and clear business loan proposals. This is what you need to give them. The aim of your loan proposal is to get the interest of the banker to study the loan opportunity and maybe pursue a deal.

Thus, your loan proposal should include the highlights of your business project and important facts about you as the borrower. Your personal should contain an Executive Summary as it explains the purpose of the business loan opportunity. The summary is usually a one page document with key segments revealing the project’s profit potential, loan opportunity, collateral analysis as well as repayment examination.

With the economy continuing to recover from the Great Recession, it is only expected that banks will continue implementing proper business lending procedures. Obtaining a business loan may not be as easy as it was decades ago, but you should not give up. With these tips, you can boost your chances of getting a business loan to increase your cash flow as well as grow your business.

Comments are closed.