By Meredith Wood
If you need a bank loan for your business, the last thing you want to think about is being denied. Instead, you want to make sure you are taking the steps necessary to put your business in position to receive financing without delay.
It is easy to believe that getting a business loan is as simple as contacting a lender, completing an application, and waiting for the funds to arrive. Even though this may be the long and short of the process, there are many details that go into this. Furthermore, you are sure to be faced with some challenges along the way.
The Process
First things first, you must decide if a business bank loan is the best option. Is this better than a personal loan? Does it make more sense to use a credit card? You know your business and its finances better than anybody else. Once you consider every option, you will have a clear understanding of whether a small business loan is the way to go.
Now that you are 100 percent confident in your decision, it is time to begin the process. It is time to get on track, ensuring that you secure the right loan from the right lender, all without wasting time.
- Answer Key Questions
Answering the following questions will allow you to get a better idea of what you are trying to accomplish:
- How much money are you looking to borrow?
- When do you need the money?
- How are you going to use the funds?
If you are unable to answer these questions with complete confidence, it may be time to step back and reassess your situation. Making a rash decision could lead you down the wrong path, such as borrowing more (or less) than what you need.
- Make a List of Lenders
You should consider both local and national banks, as both have a lot to offer. Do you have a current relationship with a local bank, such as the institution that handles your business checking needs? If so, it is only natural to learn more about their business loan products.
The SBA shares a list of its most active lenders. You won’t have the time or desire to contact all 100 of these lenders, but you can selectively create a list to get you moving in the right direction.
As a general rule of thumb, contact at least five lenders. Be sure to mix in both local and national banks, as this will give you a better picture of what each type can offer your business.
- Do Your Homework
The difference between success and failure can be as simple as the information you collect. When comparing lenders, focus on these details:
- Reputation.
- Customer service.
- Types of business loans offered.
- Application process.
- Timeline.
- APR and other terms and conditions.
This is the step in which the “pretenders are separated from the contenders.” You will soon find that some lenders have more to offer than others. Your goal is simple: to narrow your options until you find the bank that provides the best overall product and service.
Tip: make a list of what is most important to you. It may look something like this:
- Low APR.
- Reputation for high quality customer service.
- Ability to complete the application online.
With the right information, as well as a clear strategy, it becomes easier to make an informed and confident decision. If nothing else, the collection of information provides you with a detailed view of the inner workings of the business lending industry.
- Choose a Lender, Complete an Application
At some point, you either decide to move forward or decide to stay put. If you are all in, if you realize that applying for a bank loan is a must, you should feel comfortable taking the leap.
Since you want to give your all to the application process, don’t spread yourself thin. Choose the best lender, based on your findings (see #3 above), and then move forward with the application.
Note: your loan officer will walk you through this process, ensuring that you know what to do and the timeline for completion.
Here are a few points of advice that will come in handy when completing an application:
- Review the application in its entirety before getting started.
- Only provide information that is 100 percent truthful.
- Don’t be afraid to ask questions. Your loan officer is available to help.
- Set aside time for the full completion of the application. Not only will this speed up the process, but it will ensure that you are not distracted.
- Review all the information before submitting it to the lender.
Most lenders allow you to submit your application online, but there are banks that have yet to implement this technology. This is something to consider as you make a decision on which lender to choose. It goes without saying that an electronic application can save you time.
Tips for Getting Approved
There is no surefire way to guarantee the approval of your business loan application, but there are steps you can take to improve your chance of success.
These five tips will work in your favor:
- Understand the type of loan you are applying for. This will ensure that you are getting involved with the best type for your current financial situation.
- Ask questions. This can be the difference between approval and denial. It can be the difference between providing the right information and making a mistake.
- Improve your finances before applying. Can you eliminate other types of debt? Can you improve your company’s credit score? Every little bit helps, so don’t hesitate to improve your situation before completing an application.
- Create a checklist. This will help you get on track and stay on track. Your checklist can include everything from the documents you need to collect to the questions you need to ask.
- Show your loan officer that you care. Answer questions promptly. Provide the information that is requested. Follow up from time to time. When you show you care, you show that you are deserving of the loan.
Final Thoughts
There is a lot that goes into getting a bank business loan. If you have considered your alternatives and realize a loan is the best option, don’t hesitate to rely on the above advice. You may be closer than you realize to choosing a lender, completing an application, and getting approved.
