1. Determine the purpose of your business loan. As early as possible, you should determine how you intend to use the proceeds of your loan. Identify the business need that it will serve and make a strong case that will help convince lenders to grant your request for business financing.
2. Identify a suitable amount. Be prepared to tell your prospective lenders and investors how much funds your business needs. In your proposal, you should give a definite sum of cash that will enable you to finance an urgent business requirement, such as purchasing additional product inventory, settling the debts incurred by your enterprise or purchasing much-needed business equipment.
3. Come up with a debt repayment plan. Always remember that the best way to convince lenders to grant your request for funds involves displaying the capability of your enterprise to keep up with its future dues. So, in your loan proposal, you should include a section that details how you intend to repay the funds you wish to borrow, plus the interest charge that will be imposed on your business loan.
4. Offer security. You may also decide to pledge a valuable asset against your business loan. After all, by offering collateral, such as your home, car, business shares, a parcel of land or costly equipment to your lender, you can easily convince the firm to decide in favor of your enterprise.
5. Make an impressive yet factual business presentation. In most situations, banks, credit agencies, and even prospective investors will require you to present your business model and idea to help them gauge its viability and profit-potential. Hence, as soon as possible, we suggest you gather information from related feasibility studies and market researches that will help you in writing a comprehensive business plan. Then, use your business plan as reference for your business presentation, highlighting the strong points of your enterprise as well as the opportunities it could take advantage of to become profitable and to pay back its credit obligations.
6. Prepare your personal and business financial documents. Obtain copies of your personal and business income tax returns for the past two to three years, the latest financial statements and balance sheets of your enterprise, your business transaction logs and journals, especially those which contain your accounts receivables, your Employer Identification Number, as well as the permits and licenses you have secured from the state or local government.
7. Boost your credit scores. Are you aware that your personal and business credit scores affect your chances of being granted an affordable business loan? In fact, your personal and business credit history can influence the rates, terms, loanable amounts and other features that will be imposed on the credit offers you will soon receive.
This is why we encourage our readers to take good care of their credit profiles, by employing responsible credit habits. For instance, you should see to it that you submit complete and prudent payments of your personal and business credit obligations. And make sure that your credit files are free from errors or inconsistencies which could compromise your chances of qualifying for an affordable business loan.