6 Methods for Increasing Your Chances of Loan Approval
It is completely natural for a business that is just starting out to seek out loans. These loans can vary in size and can be used for a number of purposes to get your company off the ground running. Few things are as disheartening as not getting loan approval. It can be a real setback for your organization, so there are a few things you can do before applying to increase your odds.
An unconventional way to increase your chances of getting approved is to round up references. These can include landlords who know you and can talk about how you have always paid your rent on time. Utility companies can also serve as references if they can speak about how you always paid the bills promptly.
Another way to improve your odds of approval is to get a loan from a bank you have done business with for years. Your business might be new, but you have likely had a personal account for years. If you have paid your credit card bills on time and have been a loyal customer, then your bank might be more likely to cut you some slack when you seek out business loans.
Additionally, you need to know what the loan is going to be used for. If you go into a meeting with a lender and give some vague explanation for what you will be doing with the money, then that could be viewed as a red flag. However, if you say you will be using the money for something specific for your company and present a detailed plan for how the money is going to be spent, your chances of loan approval go up.
Another method to try is to bring documents that show your reliability. This can include bank statements or income reports for your business. Coming to a meeting prepared shows that you are serious, and the simple act of having documentation can do a lot of good.
Something else you want to do is check your credit history. Review it a couple months before you need to get a loan. Make sure any errors are corrected. Even a mistake that was not caused by something you did can do damage.
Finally, you can ask for a loan that does not go over your credit limit. If your business credit cards have limits totaling $10,000, then you will need to present a good reason for why you need more than that. While there are no guarantees in the business world, these are just a few ways to show a lender why you are deserving of loan approval.