Boost Your Chance of Loan Approval

Applying for a business loan can be a daunting, difficult,  and time consuming process. This 2015 small business loan study found that 47% of small businesses in the United States applied for business loans and 18% of applicants were rejected, while another 18% only received half of the amount they applied for. While these numbers seem discouraging at first there are a few things you can do to separate your business from the crop and secure the right loan for your business. 

  1. Apply Through an Affiliate Loan Partner

Many lenders offer affiliate programs for their services and allow independent entrepreneurs. These affiliate site owners have put in the work and compared loan companies and packages for you. They have done research in the market and more than likely have links to many different loan programs giving you a variety of options in one place. These companies do often receive a kickback on the referral, but it does not impact the interest rate or cost of service on the side of the small business owner. 

Here are a few companies to apply with: 

  1. National Business Capital: Business Loans in the range of $10,000 – $3,000,000. One year of business operations required. 
  2. Upstart: Business Loans in the range of $1,000 – $50,000. A great option, with interest rates that rival banks, to get funding for your small business. 
  3. Next Financing: Loans up to $500,000 and options for Factoring! 
  4. Credit Suite: Loans up to $150,000 for your small business and options for Hybrid Financing Programs.
  5. Go Capital: Commercial Real Estate Loans for any borrower that does over $30,000 in revenue per month. 

2) Gather and Organize Your Business Documents

When applying for any loan you are going to need to have the proper documents organized and ready to send out to your loan company or bank of choice. Having these documents in one secure place like an encrypted desktop folder or in a reach lock box, makes applying for multiple loans to compare your options much easier. 

You will need: 

  1. Bank Statements
  2. Tax Return Documents
  3. Business and Personal Credit Scores
  4. Profit and Loss Projections 
  5. Any Copy of relevant legal documents such as an LLC, C-Corp registration, contract, leases, permits, or other licences related to your business. 

3) Have a Written Business Plan

This is necessary if your business is new. It shows your financial projections to the lender and can possibly make up for areas where you lack actual time in business as a lender can know your plan for success with their finances. Even if you are 5-10 years in, a written business plan can add an aura of legitimacy to your operation and provides the lender with more comfort in your ability to organize and stick to your business plan. A written business plan also creates talking points for your loan meeting and shows that you are committed and organized.  

4) Have a Plan for Using the Money

Lenders need more than “I need money to grow my operation” to approve a loan, even when using a lending company. A plan for the use of the loan, even if this is just included in your business plan, gives lenders more assurance in your business operations. Saying that you need money for business expenses such as: 

  1. Purchasing Inventory
  2. Purchasing Equipment
  3. Specific Day-to-day Expenses
  4. Refinancing or Paying Other Debts
  5. Marketing 

5) Have Good Credit

Good personal and business credit shows lenders that you are a healthy, growing business. It is usually the one of the top determining factors on both loan approval and payback interest rate. Loan application and overall business financing with bad credit can be extremely difficult. If you need help improving your credit here are some ways you can do it. 

  1. Check Your Business Credit
  2. Decrease Your Credit Utilization Ratio
    1. Pay off Balances
    2. Increase Your Credit Limit 
    3. Decrease Credit Card Spending
    4. Open a New Line of Credit 
    5. Pay Your Bills More than Once Per Month
  3. Establish Credit Accounts with Suppliers
  4. Add Positive Payment Experiences to Your File
  5. “Pay for Delete” with collections