6 Steps to climb before reaching the heights!
With a tough economy, it is quite a challenge to get approved for business loans. The suggestions here might help you while you are about to apply for business loan.
- Preparing the business plan is the first step in the process. Apart from making a crucial framework for the company, a good plan will increase the chances of loan approval. The market strategies, management structure, the competition and the scope in the market, and the revenue models are the important factors to be included in the plan. Since the credit score is the indication of your financial behavior, the lenders are very specific about reviewing your credit report before considering your loan application.
- Convince the lenders of your reliability
You can present your financial documents to convince the lenders of your reliability. You are expected to be precise in your plan. Your request for funds will not be entertained unless you mention your requirements in detail. Your plan regarding the repayment should convince the lenders. If possible you can also try to demonstrate the scope and the market for your products or services by conducting a survey. The value of your services or products should be explained in detail to stress the need for funds. The success story behind your business, and your plan for the growth of the business should be clearly explained in your proposal.
- Analyze the different offers of loans
Your individual potential will help the lenders understand your capacity and reliability. There are various types of business loans and understanding of the functioning of the loan helps you choose the perfect offer for your requirements at www.realisticloans.com. Asset based loans or secured loans are suitable for huge purchases such as infrastructure and equipments or real estate required for the business. These loans are offered against the value of the assets that you set as security for the loan.
- Compare the offers from different lenders
Revolving loans function like lines of credit. Starting with a limit according to your affordability, you can draw within the limit. These are the short term loans and the period of the loan is around 12 months. Standard business loan which is mostly preferred is the ‘term loans’ which have fixed terms of around 3 years. The entire loan amount is disbursed and the repayments cover both the principal and the interest. Even if your loan application is approved, you cannot consider that your task is completed. You can discuss the same with some other lenders and they might be eager to lend with better rates and more flexible repaying options.
- Approval from a lender is enough to impress other lenders
Approval from a bank makes you appear a potential customer in the eyes of other lenders. You can make use of the opportunity. However, it is suggested that you stick on to your banks with which you have been maintaining a good relationship instead of shifting from one lender to another. Your good track record makes it possible to get loans easily in future. When you apply for a line of credit, you need to make payments monthly based on how much you spend. The process of application for the line of credit from bank is just like the process of any other loan application. The interest rate is generally higher for a line of credit.
- Choose as per your requirements and affordability
Although you might be approved for loan by the first lender you approach, it is recommended that you shop around to get one of the best offers. The Small Business Administration is one of the best sources of funds for business growth. You are offered various types of loans for your small businesses. You can get guided regarding which bank can be approached to get loans guaranteed by the Small Business Administration. However, you need to wait patiently as the process with SBA is quite lengthy and strenuous. Besides these offers, you can get loans from friends of family members or you can raise funds through peer to peer lending. Depending on your requirements and affordability, you should make a decision and choose the offer that is ideal for your situation.