Whether you’re gathering funds for your dream startup or a growth spurt in your existing business, as an entrepreneur you’ll have to get a loan sometime. The preparation and application can seem daunting for the is process, but taking certain steps can make it less stressful. Get the money you need in the right amount and at the right time with these tips.
1. Start Early
The ideal time to start the business loan process is before you actually need the money. Build relationships and network with possible lenders in your area so that they can get to know you and your company while there’s no pressure as opposed to introducing yourself for the first time when you come in asking them to do something for you. Skipping this step doesn’t mean you won’t get the loan, but doing it will help. Everyone would rather do business with someone they’re familiar with, and bankers are no different.
2. Research Options
While you’re getting to know some lenders, look into each institution you’re considering. Which ones are familiar with your industry? Ask around your Chamber of Commerce or other small business networking groups or mentors for recommendations or even an introduction to a lender who might be able to help. This will prepare you for an interview with a loan officer.
3. Make Your Case
Don’t just turn in your documents at the interview and call it a day. Figure out beforehand how you will pitch your business. Show your past successes, share your future projections, and explain why the loan is needed in a compelling way. Even if your company doesn’t meet the minimum requirements for the loan, it can still boost your chances to make your case in a way that paints a full and vibrant picture of your business.
4. Shop Smaller
Your chances of snagging that loan might tilt more in your favor at a local bank or credit union. Because they operate in the same neighborhood as you do, they might be more inclined to see the value you add to the local economy and have some prior knowledge of your business. Ask about a Small Business Administration loan as well; a commercial lending institution might go easier on you with a loan like this because a portion of it is backed by the government.
5. Be Persistent
After you’ve completed the application process, the hardest thing to do next is wait. Allow several weeks to get an answer, but don’t be afraid to check back in a few times. Unfortunately, it’s also possible that you might face some rejection. If you’re turned down ask why and learn how you can improve your next loan application. Once one bank says no, keep trying others. Don’t give up!
Applying for a loan is nerve wracking. To make the process a little easier on yourself, try out these tips so that you’ll be fully prepared for the process and make the best of every application.