A Few Things Startups Should Know Before Applying For A Business Loan
Businesses that are looking to get a business loan today need to follow some specific procedures and meet some requirements set by lending institutions such as banks. If you so happen to be part of a startup that requires a business loan, then you need to know everything in regards to business loans as this will enable you to better prepared and even increase your odds of getting the loan.
The first thing you need to have in order to even remotely qualify for a business loan is a good written business plan. Financial lenders will mainly use your business’s business plan to see how you will spend the loan if granted as well as how you will generate revenue in the future. Management experience, market research, and cash flow projections for a few years are just but a few of the requirements that should be in a good and well written business plan.
Strive to start by investing some of your own funds. A financial institution will be convinced beyond reasonable doubt that your business will thrive and pay back a loan if you first and foremost invest your own money before applying for a loan. You should own at least a quarter of the equity in your business for a financial institution to approve your business loan quickly without much fuss.
Financial institutions also favor businesses and startups that rent property when starting out as opposed to those that go straight into buying real estate property. This trend is growing and getting more popular among financial institutions mainly because most of them prefer small businesses and startups that spend money on revenue generating assets such as inventory and equipment instead of buildings that will be a liability for a few years before being an asset. Most banks and financial institutions will grant your small business a loan if you rent real estate property as opposed to buying as you will most likely have more funds to invest in revenue generating assets such as equipment.
Another great tip that will help your small business get a business loan approved is to review your credit report as this will prove to banks and other financial institutions that you are ready to do legit business and make profits in the long run. Reviewing your credit reports is very important and will greatly improve your small business in addition to also qualifying it when it comes to getting business loans from banks and other financial institutions. Banks often use your personal credit history when it comes to qualifying you for a loan. It is more often than not a very good idea to maintain a good credit score if you so happen to own a business or are planning to own one in the near future.
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