How to Improve Your Likelihood of Getting Lending
Almost all businesses will find the need for extra finances at a certain point. Yet, applying for a loan may seem like an intimidating task, especially for first timers. So what should you do to improve your chances of getting lending?
Before you apply for a loan, it’s important to understand some basics. Lenders want to protect their money, which is their asset. So as a lender, they are looking to recoup the principal, earn from that principal, and most importantly, they want you to succeed and maintain good relations with you.
Therefore, as a loan applicant, you need to make the lender feel safe and trust you with the loan. Here is a checklist of what you should do before applying for a loan successfully.
- Know how you will use the borrowed money
Make sure that the use of the funds will directly influence your business’ profitability. Also, know how much funding you’ll need to finance that.
- Have an idea on how long it will take for you to pay the lender back
Keep in mind that the lender will ultimately want to see how the loan will actually repay itself through your business operations
- Know your personal credit history beforehand
Sign up and monitor your FICO Score and Equifax credit report at myFico. Make sure everything is accurate and dispute any errors if any. You don’t want any surprises when the lender pulls your credit report and find items in it that you didn’t know about!
- Incorporate and register your business. Know the differences and choose the one that’s best for you.
Find more information about and register through Legalzoom.
- Get an EIN, and know what taxes you’re going to file
Don’t wait until tax season to figure it out.
- Open a business bank account
It’s important to show that you’re active in your business by keeping your deposits frequent and your daily balance high.
- Get your business financial records in order
If you’re an existing business, have your bank statements handy. If you’re a business that accepts credit cards, supplying your merchant statements may help your application.
- Be honest
Let your lender know if you have any legal problems with your business, i.e. outstanding judgments, tax liens, bankruptcies, etc. It is best for you to establish a payment plan prior to applying for your loan. However, if you don’t have one, it will be beneficial to demonstrate how you plan on resolving them.
- Ask questions
Don’t be afraid to make inquiries!