Posted on: 18 March 2018
If you want to start a business but you already know that you will need a loan to get started, there are some things that you want to know before you apply for a loan. The banks will want to see that you have a serious and practical plan, that you will be responsible and capable of paying back the money, and that you are a potential business owner worth investing in. Here are some of the things that you want to do, and things to expect when you apply for the SBA loan.
Set a Tight Budget
You want to work with a very tight budget the first couple years you are in business, even if you are doing well. You also want the potential lenders to see how frugal you intent to be. This means choosing an area where rent is low, driving low cost vehicles, buying used equipment, and budgeting for the bare minimum that you need. If the lenders see you aren't pricing out the most expensive options in your business plan to take out the loan, it shows them you are trying to save thousands.
Get Your Finances in Perfect Order
Investing in a business is more of a risk than a person who has a job, because with no business there is no money coming in. You want to be sure that your credit is in order, that you have a low debt to income ratio that you have done your research for the amount of money you should have to put down on the loan, and what type of loan you can really afford. Showing the bank you are a great lender will be helpful.
Plan to Bank with the Loan Lender
Offer to bank with the lender that is offering the loan. This way they can monitor how much money is coming in and going out with profits, payroll, functioning expenses and more. It may also be easier for them to withdrawal the payments this way. Ask if this option is something that could increase your chances of getting approved for the loan.
There are a lot of factors that will determine if you can get the loan approved. You may want to consider a partner or co-signer to help with credit limits and to add more money to the down payment, and you should talk with multiple lenders until you find the right one.Share