Applying for a business loan can be a complex and intimidating process. However, you may need a loan to take your business to the next level, so at some point, you may need to apply for a loan. You'll have to prove your business is a good risk to the lender, and that will require proper documentation and good credit history. Here are some things to get in order before you apply for a business loan.
Set Your Business Up Properly
If you started your business in your spare time out of your home, it may have started so slowly that you don't have documentation of the start date. You may not even have an LLC or corporation set up. To get a business loan, make sure your business is established properly. Use an attorney or accountant for advice on all the steps you need to take such as establishing a business bank account, setting up an LLC, and getting documentation for things like a start date for your company. Anything you put on your loan application should have proof to back it up. You'll need all the documentation regarding the establishment of your company as well as things like income, assets, expenses, and tax records so you can submit them with your loan application. You may even want to hire an accountant to review the documents and statements you'll submit to the lender so you have an idea of your chances for approval and things you might be able to do to improve your odds of getting the loan.
Establish Credit In Your Business Name
It's difficult to get a loan when you don't have a credit history. It's good if you can establish a credit account with a vendor or credit card company that reports to the credit bureau so your company has a credit history and credit score. Your personal credit history may be pulled when you apply for a business loan as well. For this reason, you'll want to keep your personal credit clean and work to improve your score in case your business ever needs to apply for a loan.
When you have all the documents and statements you need, you're ready to begin the application process. Be sure you are dressed professionally if you apply in person and conduct yourself in a professional manner. Be prepared to answer questions about what you want to do with the money and what you can supply for collateral. Present your business in the best light possible so the lender sees you as a good credit risk.