[This article was written by Brooke Chaplan.]
As a business owner, you know how important it is to have the funding necessary to keep your business growing. But to accomplish this, you may need to work with lenders to secure a business loan now and then. However, since lenders usually have very strict requirements for loan requirements, getting approved may be more difficult than you realize. If you are in need of a business loan for preventative and protective services, here are five ways you can increase the chances a lender will say yes to your loan request. Start by creating a detailed business plan, consult with specialists, compile your documents, improve your credit score, and know your gross monthly revenue. These tips will enable you to justify your need for a loan and have a better chance of securing collateral.
Create a Detailed Business Plan
You need to be prepared to justify your expenses and need for a loan prior to meeting with or contacting your lender. Before you ever meet with a lender, always have a detailed business plan prepared and ready to put in their hands. When preparing your plan, always have it include such things as financial reports and forecasts, market analysis, and your business strategy and how you plan to put that strategy into action. Include how this loan will enable you to improve your services and potentially boost your cash flow, as this will help show that you’ll have the means to pay them back.
Consult with Specialists
One of the difficulties in getting loans for preventative services is that they often serve to keep negative drains on your resources from occurring, but do not directly impact your cash flow. If you need a loan for preventative and protective services, showing a lender you have already sought out consultation from specialists in these areas will be a plus. For example, if you are wanting to install a state-of-the-art fire alarm system at your business, showing you are already talking with fire protection engineers may be the ticket needed to get your loan. It will demonstrate that you have done your research and already know what services will be most useful to you.
Compile Your Documents
The most tedious, yet important, aspect of loan preparation is compiling documents. To be fully-prepared, compile all the documents that will likely be needed by lenders who are considering your loan request. These usually include several months worth of bank statements, at least two years worth of tax returns, and other related documentation. By having all of these in advance, you will demonstrate your financial preparedness and past trustworthiness.
Improve Your Credit Score
Perhaps more than anything, your credit score may be the deciding factor as to whether your loan request is approved or denied. Therefore, try to have your score be as high as possible by paying your bills on time, fixing any errors on your credit report, and not opening new accounts prior to making your loan request. By boosting your credit score, you will be more likely to be approved for new loans.
Gross Monthly Revenue
Since a lender will want to make sure your business is strong enough to pay back any loans you receive, make sure you know your gross monthly revenue. If you’re asked for this information by a lender and you don’t have it, plan on being turned down.
While it can take some time to compile all the information you’ll need for a business loan application, it will be worth it when you get the funding and can finally put your much-anticipated plans into action.
Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She recommends looking up fire protection engineers for preventative services. For more information, contact Brooke via Facebook at facebook.com/brooke.chaplan or Twitter @BrookeChaplan