Easy Steps to Get a Bank Loan for a Small Business Guaranteed
1. Do your home work…perfectly!
Before you send your loan application to the bank, you should try as much as possible to address all the issues that your bank will consider before granting your request. These issues are briefly discussed below:
Your personal credit history
As an entrepreneur, your personal credit history plays a significant role in your ability to secure a bank loan for your business. Banks and other institutions will look closely at your credit history and credit score before lending you money. This is because they need to have some insight of your financial management capabilities. No one wants to lend their money to someone who obviously cannot pay back!
Before applying for a loan, you need to obtain your credit reports from the reporting agencies and ensure that they are error-free. If there are errors in them, you should write the agency a letter to notify them of the error so that they can make the necessary corrections. Also, you must make sure that you are able to explain any late payments or defaults on your credit report. Overall, before approaching a bank, you need to put your credit history in order.
2. Review your options
Look at all the banks around you. Don’t just approach any bank; start with the smaller, regional banks and microfinance banks, as you have a better chance of getting a loan from these banks—especially if you are just starting your business. To boost your chances of getting the loan, you will need to send applications to many possible lenders at once. So, you should have a list of all the banks you will be approaching.
3. Review the loan application requirements
Before sending your loan request to any bank, you should visit the bank’s website or check into one of its branches to find out about the guidelines for loan applications. The easiest way to having your application trashed is not presenting it as required by the bank. So, it’s very important to find out how each bank wants you to craft and submit your loan application.
4. Submit your application and make the appointment
In order to encourage the loan officer to give your loan application a second look, you will need to make it really compelling. You can start by writing a brief application letter summarizing your operation and reasons for requesting the loan, and submit it along with well-printed copies of your business plan and financial projection statements.
You will also need to include an executive summary, as this is the first thing most loan officers will look out for. Also, you must ensure that the whole package look professional. And end your letter with a request for an appointment with the loan officer. In all, be concise, succinct, and organized. Of course, there may be no hard and fast rules to follow on this step.
Just follow the loan application guidelines given by the bank you are approaching and you will be fine. Getting a bank loan is getting more difficult by the day, due to competition and other factors. But this doesn’t totally rule out your chances of securing one. If you diligently follow these steps, you will significantly boost your chances of securing a business loan.