Have a great idea but not quite sure how to secure a small business loan to get you started? Getting a lender to give you a loan isn’t as easy as filling out an application. Rather, many lenders are selective in which business loans they approve. Here are five tips to help you secure the small business loan you need.
1. Create a Business Plan
Expect the unexpected by creating a solid plan. Your best chance of securing a small business loan is to create a strong business plan before you start filling out loan applications. Small business ideas are a dime a dozen and lenders aren’t going to approve a loan application without first assessing how well you’ve developed your business idea.
A few of the basics to include in a business plan include your overall business idea, how you plan to make money, how many expenses you expect to have for the first few years and more. The more details you can flesh out regarding the business idea, the better. A well-rounded business plan will show lenders that you’re a serious entrepreneur and that you’re committed to making your business idea a success.
2. Know which Loan you Need
Startups have more options than ever before. You can’t find the best loan for your business if you don’t first determine which type of loan is needed. For example, do you need a general small business loan, an equipment loan or another type of lending solution? Each type of loan that’s available to small businesses serves a different purpose and some of the solutions may not be good matches for your business.
The purchase of equipment is often one of the biggest expenses that new business owners face. If you’re opening a coffee shop, bakery or another type of business that will require several pieces of equipment, you’ll likely need to secure an equipment loan to get the business up and running.
3. Choose the Right Lender
According to the article “Best Place to Get a Small Business Loan,” there are many red flags to avoid and positive qualities to seek when searching for a small business lender. A few qualities to seek out in finding the right lender include an easy application process, a rapid process of getting the loan money and reasonable repayment terms. Another way to learn more about a lender is to review the company’s online reviews and ratings.
By selecting your lender with care, you can avoid many of the lending problems other small business owners have faced. You can also enjoy such perks as a lower interest rate, convenient payment options and more.
4. Don’t Give Up
Was your first business loan application denied? Don’t give up! Many other lenders offer business loans and one of them may be more likely to approve your application. But, before submitting another application, assess why your first wasn’t approved. This insight can help you revise your business plan or adjust your application to secure a loan approval from another lender.
5. Properly Track Finances
After your business is up and running, properly track all finances. From knowing how much working capital you need to properly tracking supply costs and more, each element of your finances impacts the business’s health. How well you track your finances may also impact your ability to secure a future business loan, such as for an expansion.
Know what matters will help you better understand how you can secure a small business loan and get your idea up and running? From creating a strong business plan to knowing which type of loan you need, there are several ways to increase your chances of finding the best funding for your company.
Shayla Ebsen is a freelance writer and editor with more than 10 years of professional writing experience both in the corporate and freelance settings. Learn more about Shayla here.