Tips To Get Your Small Business Loan Application Approved Right Away
Finance is one crucial element for the success of any business. Most small businesses have tight financing and they often resort to small business loans in order to find enough finances to function smoothly.
Applying for small business loans is not science and it is easy to get approved as well, however, provided that you apply in the correct format. The main reason why small businesses get rejected when applying for a loan is that they do not do it the right way.
So, how can you get your small business loan application approved instantly?
- Check Your Credit History. Well, any institution providing a loan wants a guarantee that the loan can be repaid. If your business has been running for less than 3 years, then your personal credit history and the credit history of your business will be checked before granting you a small business loan. In order to maintain a good credit history for both yourself and your business, make sure that all existing loan repayments are done without any delays. You can check your credit score by requesting a credit report from major credit reporting agencies. A score anywhere around 700 is considered a good credit score and will significantly increase the chances of your loan application getting approved instantly.
- Choose the Right Loan Type. A business may require loans for a variety of reasons, like buying new equipment or meeting daily expenses. There are different loan types that businesses can avail depending on the different needs that they may come across. For example, there are loans for businesses to buy equipment where only about 20% of the equipment’s cost needs to be paid in advance and the rest of the amount can be taken as a loan, as the security for the loan will be the equipment. There are also government-backed loans specifically for small businesses with a low-interest rate. Choosing the right type of loan will not only make sure that you can get your loan application approved quickly but also can help find the cheapest loan for your exact requirement.
- Do Research. Some requirements to get a small business loan approved may differ from place to place. The best way to make sure that all the requirements are checked is by getting in touch with small business owners who have already availed business loans in the past. Alternatively, you can also do research online as websites like Thebankly can be of great help. They regularly feature articles that can help any type of small business owners get their business loan application approved.
What To Do When Your Small Business Loan Application is Rejected?
It is not possible for everyone to get their loan application approved on the first try. Getting rejected the first time does not mean that you are out of chances.
Even if your small business loan application is rejected, here are some tips to make sure that you get an approval the next time.
- Request for The Reason of Rejection: If your loan application gets rejected, it is very important to request that the loan issuer gives a reason in writing for rejecting your application. Once you get this reason, you can identify exactly what went wrong and can either submit a better application or choose an alternative.
- Find an Alternative Loan Issuer: If you have done research on business loans, then you know that there is no shortage of business loan issuers. However, some issuers may have stricter rules than others and they might take factors, like your credit score, pretty seriously. There are many loan issuers that offer small business loans even to businesses that may lack certain requirements. Like, there are issuers that offer loans to small businesses even if their credit score is bad. On the flip side, they might charge higher interest for the risk that they are taking.
- Try to Individually Convince the Loan Issuer: Some loan issuers may reject your loan application because they are not confident about your business practice. The best way to convince the loan issuer is to individually have a meeting with the loan issuer to let them know how important the loan is for your business. In the meeting, you can present the current status of your business and how getting the loan approved can benefit your business and its working. The presentation should not only have text but contain slides and charts depicting how far your business has come since the beginning, the potential of your business, and how well the loan can benefit the working of your business.
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