Here are 8 tips for getting a small business loan:
- Put yourself in the lender’s shoes. Lenders want to see that you have good credit quality, good cash flow, a good understanding of your financial situation, are willing to use collateral such as your house, and that when you show up you are dressed professionally.
- Figure out how much you need. The less is better.
- Consider a SBA loan. Find a Small Business Administration (SBA) backed lender. Rates are usually lower and repayment terms easier.
- Learn from rejections. If the first lender rejects you, try to figure out why. If correctable, fix it before you see the next lender.
- Poor credit? Have a Plan B. If you are rejected for poor credit, consider using your Accounts Receivable as collateral. Or look to alternative lenders, such as internet lenders who have higher interest rates but make it easier to get loans.
- Read the fine print. Understand the terms of your loans, including the APR, additional fees and prepayment penalties.
- Use a small bank if you have one near you. Smaller banks generally have more small-business customers and often offer more personal service.
- Have your financial statements ready. This includes up-to-date and where you know them inside and out.
We would love to hear your experiences about trying to get a business loan. Feel free to comment, call or email with your suggestions.