Loans are an accessible way for companies and individuals to get funding. Learn the difference between a business loan and a consumer loan in this blog!
These are essential tips on how to increase your chances of getting a business loan.
5 Tips to Increase Your Chances of Getting a Business Loan
- Create a solid financial plan
Your financial plan is crucial in getting your loan approved, especially if your current financial position is not great. With financial projections, you have the opportunity to showcase the expected growth of your company and its forecasted expenditures and revenues.
When preparing your financial plan, remember to base it on the previous accounting statements of your company. Think about the strategies that worked and what didn’t and use these strategies to propel growth. If you see pessimistic financial ratios, analyze them and provide concrete steps to improve them.
- Maintain a good personal credit score
If you’re establishing a start-up or a new business, your business may not have sufficient history in proving your financial capability. As a result, banks and loan providers would likely check your credit score to ensure that your company would be able to pay its dues.
In maintaining a good personal credit score, pay your bills diligently and on time. Invest your money and keep on saving. There are multiple ways to keep a good personal credit score. Just make sure to avoid habits that ruin it.
- Keep your daily bank balance as high as possible
In line with maintaining a good personal credit score, you should also keep your bank balance as high as possible. If your business does not have enough information on its business income, they would usually check the owner’s financial standing. Lenders typically check this to assess your financial capability and if you would have enough cash to pay your loan.
- Keep your documents ready and organized
In assessing profitability, banks would commonly analyze your records from the previous years, if possible. Some standard documents they ask for include government registrations (SEC, BIR, and DTI), mayor’s permit, bank statements, proofs of billing, and checking accounts of your enterprise.
- Apply for a realistic loan amount
Lenders are usually willing to loan amounts below 40% of your monthly income. For this reason, banks and all other lending platforms require you to submit proof of payment for them to know your monthly income. Your proof of payment will allow them to grant you an amount proportionate to your monthly income.
Given these tips, getting your loan approved can make or break your business. With the hefty and meticulous process involved in the application, it is crucial to find the right company to help you get your funding.
Contact the experts at Zenith Capital to learn how we can help with securing your business’s future.