There’s nary a dull moment in the life of a small business owner. In essence, small business proprietors have multiple full-time jobs. Each day, these enterprising entrepreneurs meet with clients, deal with employee disputes, examine prospective new hires and tend to countless other tasks. Whenever a small business owner is interested in making improvements to their enterprise but doesn’t have sufficient cash on hand, they opt to apply for small business loans. It should be noted, however, that lenders don’t give these loans to just anyone. To improve your chances of being approved for your next small business loan, put the following tips to good use.
1. Have Minimal Outstanding Debt
Not many business lenders are willing to take chances on borrowers who are deeply in debt. After all, if your company can’t be trusted to reimburse its other creditors, why should a new lender go out on a limb for you? With this in mind, you’ll need to pay down most – if not all – of your business’s outstanding debt before turning in your loan application. Just remember – the more debt you have, the less likely you are to be approved for loans.
2. Make a Convincing Case
Although getting rid of outstanding debt is a solid first step, it isn’t the only piece of criteria lenders take into account when reviewing loan applications. You’ll also need to make a convincing case regarding the purpose of the loan. For example, a restaurant owner who wants a small business loan to build an attached bar will need to clearly explain why she believes this will be a profitable venture when applying for a loan.
3. Show That Your Business is Profitable
Not surprisingly, many lenders are wary of providing loans to small businesses that are faltering or outright failing. This is why it’s a good idea to show prospective lenders proof of your business’s profitability. This proof can take the form of earnings reports, sales records or any other documentation of your past success.
Most lenders wisely avoid giving out small business loans willy-nilly. This means that small businesses in the market for loans need to put their best foot forward when preparing to apply. Fortunately, heeding the pointers discussed above can dramatically increase your chances of receiving approval on your next loan application. If a generous loan is what you’re after, making a dent in your debt, drawing up a convincing plan and providing proof your business’s profitability can prove invaluable in helping you get it.