Question 1

Take care of your personal credit history

Accepted Answer

You as the small business owner would want total separation of your personal credit from your business’ credit when applying for a small business loan. The reality, however, is that lenders will factor in your personal credit history when determining your risk level as a borrower of a business loan.   To prevent having a bad personal credit history from being the reason you do not qualify for a business loan, ensure that you take good care of your personal credit (payment of debts, keeping credit card balances low, manage your debts, limit your application for new credit etc.)

Question 2

Have a comprehensive plan for using the money

Accepted Answer

When you are going to speak to a financial institution or any lender about borrowing money, you need to be very clear about how it will be used. If you give vague/general responses about how the money would be used to expand your business, then you will be at a disadvantage.   The lender would want to know exactly how the money would be used (purchasing of inventory, increasing labour force, acquiring fixed assets etc.) so that they could better determine your eligibility for the loan.

Question 3

Be organized and over-prepared for your loan interview

Accepted Answer

In a case where the lender asks for a specific piece of information, you need to be able to present it. By having ready every piece of documentation the lender could possibly want, shows a sign of your preparation and efficiency and would generally improve your odds of getting the small business loan.   The lender wants to understand what you do, what your needs are and how they might be able to help you without putting them at unnecessary risk. Be ready to explain this and answer more questions from lenders.

Question 4

Ensure you have a refined version of your business plan

Accepted Answer

You find that small business operators have a greater chance of getting a loan when they have present with them a solid business plan. This document would have information as it regards how the business makes money, what it does, why customers pay for the products offered, market opportunities, business model, why does your business have an advantage, costs etc.   Your business plan should essentially show the lenders that your business is poised for success.

Question 5

Provide credible information about your business

Accepted Answer

We know that when you are applying for business loans, you will need to highlight the strengths of your business. However, you should always resist the temptation to mislead your lenders into thinking your business is magnificent (includes forging of financial statements and other misleading activities). Not providing credible information to the lender may hurt your chances of approval for the loan.

Question 6

Find the best lender for you

Accepted Answer

Look for loans from as many lenders that you can possibly find for financing and compare their interest rates, amount of financing being offered, terms as well as any other comparative feature. By doing this, you would be able to pick the best loan that works for you.

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