1. Keep your house in order!
Securing a small business loan can propel your potential and lead you towards your goals faster. You would not want to delay that! Be smart and ensure all required documentation is organized, up-to-date and easily accessible. This includes updated financial records, income statements, balance sheets, personal and business credit score, and invoices.
2. A robust credit score
If your credit score is in good shape, then that’s good news for your company. You can get a free copy of your credit report from annualcreditreport.com. If you find any incorrect information on your credit report, contact each credit reporting agency (Experian, Transunion and Equifax) immediately to resolve any issue. Remember, while small delinquencies are understandable, lenders are uncomfortable with statements that show delinquencies on child support or recently dismissed (not discharged) bankruptcies.
3. A sound Cash Flow Analysis will reap benefits
If your company is in good health, you’ve won half the battle. Showing 3 to 6 months of positive cash flow can get you approved faster. It can even get you better financing terms for your small business loan.
4. Have an airtight plan and factor hidden costs
A plan that reflects your current and projected financial standing, business potential and growth strategy will certainly propel your application faster. Ensure that you’ve done your homework and market research properly. You don’t want to be caught on the wrong foot! Also, be prepared to handle hidden costs in the business.
5. Bank statements will be a big help
A company’s bank statements can provide a good picture of its financial health. Therefore, it’s a good idea to furnish at least three months of bank statements when going for alternative financing. Here’s a quick tip: If you are able to maintain a positive daily balance on your bank account, it always works in your favor.
6. Don’t let large deposits to your account slow your application
Financial windfalls are great. But large deposits are viewed suspiciously by wary lenders. They want to be sure that it isn’t money suddenly deposited to your account to help show that your business is healthy, or worse yet, is part of a scheme to defraud lenders or launder money. If you have your paperwork in order and are able to explain these large deposits then you should be fine. Here’s an example: if you are in manufacturing, you may have large deposits daily or at frequent intervals. In this situation, ensure that you provide copies of your account receivables and future contracts. This will help expedite your small business loan application.
7. Manage and finish off payments for other outstanding loans
There could be times when you need capital for various purposes and have elicited the services of multiple lenders. In this situation, you may want to manage and finish your loan obligations before choosing an alternative financing option for raising more capital.