Sunday, December 15, 2013
Need a Bank Loan? Here are 4 Ways to Increase Your Chances of Being Approved
Sooner or later, every small business owner needs funding, and the primary source is generally a loan from a bank. But getting approval can be difficult for small businesses. So, here are five ways in which you can increase your chances of being approved.
#1 - Find the right bank
Banks tend to specialize in different areas of banking, such as commercial, consumer, and business loans. They may even focus on specific industries such as agriculture-related businesses, or real estate financing. Do your homework and find out which banks lend to businesses in your industry. This will ensure you are working with someone who is knowledge about your business and will also increase the chances of your being approved.
#2 - Present your business plan clearly
When you apply for a business loan, the bank needs assurance that they are going to get their money back. So be sure to outline to the banker your plan for how you're going to make money in your business. Include information on market research and potential for sales. Let them know what value your company offers and why the bank should support you with a loan.
#3 - Put yourself in the bank's position
Thinking like a banker will help you understand where they are coming from, and this will enable you to be better prepared to anticipate questions and provide the right answers. There will be bumps in the road. Explain to the banker how you plan to deal with them. Your banker will have more confidence in your ability as a business owner if you indicate that you recognize the risks of starting your own business.
#4 - Be able to explain how you will repay the loan
It's important to have a well-thought-out plan for repaying the loan, and be able to clearly explain your plan to the banker. Banks need to know what sources you have to repay the loan. Identifying these sources ahead of time will increase your chances of not only getting the loan but getting a better interest rate as well.