Small business loans can be hard to obtain if you're new to the game and are balancing a family on the side. Luckily, the process doesn’t have to be a nightmare. You can still have the success you desire without worrying about your loans not being approved. Of course, this means taking measures so that all the paperwork is in order and your application is approved. Without loans, you won’t be able to get your business off the ground, so don’t think that you don’t need them.
If you want to speed things up, you’ll need to take full advantage of the tips provided below. Here’s how you can get your loan approved painlessly and quickly.
The thing you have to understand is that it will take a long time for you to get approved. Most business owners who have never taken out a loan think the matter is as simple as going to the bank and filling out an application then getting the stamp of approval and moving on with your life. In reality, the approval process will take weeks. In some cases, it may even take months. Starting early gives you more time to spend with your kids. Family time doesn’t have to suffer just because you have one more responsibility at work.
With this in mind, starting the process as soon as possible is in your business’ and family’s best interest. After all, you’ll need the money sooner rather than later. You don’t want to be stuck waiting for your loan to approve and suffering because of a lack of finances. Instead, take action right away so that you don’t have to experience any halts in production and operation. The sooner you obtain the finances you need, the brighter the future your business has. Of course, starting the process means looking around for the right bank and getting all the necessary documentation first.
Having a detailed plan about how you’re going to use the money is a very important step. If you just give your lender a vague and general response, they won’t take you seriously. A true business owner has their course of action figured out step by step. You shouldn’t just wing it and go with the flow. This kind of attitude doesn’t contribute to long-term success. The lender will always want to know exactly what you plan on spending the money on because that will help them determine whether your plans are feasible or not.
Since every business is different, coming up with a plan and sticking to it may be possible in different ways. There are a few very smart ways to go about using a loan, though. They include business expansion, administrative expenses, and capital investments. As well as that, we can’t forget inventory purchases. You can also refinance or pay down your debts. Of course, keep in mind that lenders don’t look too kindly on the last two options.
Applying for loans can be tricky, which is why you should be over-prepared. As a mom, you’re probably used to that. After all, you never know what can happen with kids so it’s always best to anticipate all possible scenarios. Treat your small business exactly how you would your kid’s first day of school. Don’t think that preparation isn’t key to this process and that simple paperwork will do the trick. You’ll need to be exceptionally organized and prepared for every outcome. Lenders can ask for specific pieces of information, and you’ll need to provide them in a timely matter. If you keep things under control and regularly check the books, you’ll be able to give them an answer almost right away. This makes you seem way more professional than if you had waited a long time to give them an answer. It shows the lender that you pay attention and keep things the way they’re supposed to be.
Over-preparing ahead of time is the best course of action in this situation. By having every piece of information they may ask for ready, you’re significantly shortening the process. It doesn’t hurt to impress the lender with how efficient you are and with the fact you’re not afraid to take control over the situation. Demonstrating you’re a leader also demonstrates you’re fit to run your business, and thus pay off the loan.
Going into the loan game is a big deal and can be quite overwhelming. This is why you should always ask experts for advice. After all, they’ve been in this game for a while and will be able to give you the best advice and information. Knowing what to do in these times is critical for your business because your 3decisions can either make you or break you. Having a financial advisor is essential as they will keep your best interest in mind while still saving you money. As well as that, calling up a lender with the concrete advice your financial advisor has given you makes you seem much more professional and dedicated.
If you don’t think this matters, just put yourself in your lender’s shoes. Who would you rather do business with? Just someone who calls you up and asks for a loan, or someone who sets up a meeting and explains they’ve spoken to their financial advisor and board of directors? The second person demonstrates they need the help of those more experienced to set their business on the right track and show dedication to making things work. They’ll always be the preferred candidate.
Being transparent about your finances can only help you when you’re applying for a loan. This is an absolute must in the process. If you take time to keep your accounting and financial records up to date and accurate, the application process will be much quicker and less painful. Don’t forget to keep up with your tax records, too. You need to make sure that your business has a system in place to keep things organized. Gone are the days where you had to do everything by hand. Today, software can keep track for you and ensure that nothing is missing from the records. This also makes it much easier to stay on top of your work and everything going on with your business.
Self-financing and handling your own bookkeeping as a means of saving money simply isn’t an option. This is especially true if you’ve got small kids at home. Regardless of how much attention you pay to them, as soon as you turn your head, your documentation might be missing because of your kid’s curiosity and adventurous spirit.
You simply have to spend money to make money in this situation because it will save you a lot of hassle in the long run. It’s very easy to ignore and forget the books when you get busy with other aspects of running your business, as an owner. Having a trustworthy accountant by your side will mean the world to you when things start to expand and get more complex. As well as that, a good accountant can help you look at the books objectively, without involving emotion when making the tough but good decisions for the business.
Paying your bills on time will make you seem like the responsible small business that you are. There are many types of credit criteria that you will need to meet, so it’s best to have the best credit possible. Not only does this mean paying your bills on time, but it also means avoiding bankruptcies, charge-offs, late payments, and foreclosures. Different banks may have different requirements for loans, but good credit is an essential part of the loan-approving process regardless of where you apply.
One important thing to keep in mind is that you should apply for only one loan at a time. Because lenders require a credit report every time you apply, applying for more loans at a time can make you look less serious and responsible as well as hindering your credit score. In fact, this could kill your chances of getting a loan completely.
Every time you submit a full loan application, the lender does a hard pull of your credit score. For many business owners, this is an action that could very well knock a few points off their score. This isn’t a big deal when it just happens once, but if you keep applying for loans, you take a new hit with every application. Eventually, this will completely ruin your chances for success due to a bad credit score. You’ll simply be bringing your overall odds down instead of doing yourself a favor by applying to more loans at the same time. Starting with one is the best chance you have of securing the loan and obtaining the finances you need to keep your business afloat.
Even though this might be hard news to swallow, every bank will be different. There are pros and cons of every bank you encounter, and they don’t have to be the same for everyone. For example, large banks are usually preoccupied with big clients. This has a lot to do with the fact that larger loans bring in larger profits for the bank. When you put it this way, their focus on bigger clients seems reasonable. What does this mean for you, though? Well, as a small business, it means that you probably won’t get as much attention as you were hoping for. In fact, it may even result in a denied application in some banks.
This shouldn’t discourage you. Just because one big bank denied your application doesn’t mean another one will, too. You’re free to shop around and see which bank suits you best. Perhaps it’s best to look at smaller banks and the benefits they provide. Small banks are more generally built on personal relationships, instead of on high qualifiers like big banks.
In other words, meeting with a local banker will give you a better opportunity to put a story to your loan request. By building a relationship with your banker, you’re improving your chances of getting your loan approved and you’re also guaranteeing success for your company. Plus, small banks are more likely to have to have benefits for those with families.
There are several different types of loans you can opt for. In order to find the best type for your business, you’ll need to understand exactly what each of them offers and implies. Not choosing the right loan right away can greatly affect your business and take a toll on your finances, productivity, and growth. For example, getting the Small Business Administration loan when you just need a line of credit can slow down your business significantly and even result in you getting your loan denied.
Low rate personal loans are always an option, too. With them, you won’t have to worry about getting your business into too much debt. The biggest myth about business loans is that getting approved is difficult. This simply isn’t true if you know how to apply for the loan you need. When applying for personal or business loans, you should thoroughly research what kind of documentation you need to be approved more quickly. You should also look into possible loan benefits for mothers.
If you’ve already started your business, any bank you apply for a loan for will ask to see that you’ve got sufficient cash flow. In other words, they’ll want to know that you can make monthly payments. This is estimated by looking at and analyzing your tax returns and any debt that may already exist. If you’re just starting a business or otherwise buying one, you need to show your financial projections in detail.
Providing a financial plan that clearly shows that you’ll be able to make the monthly payments is always a good idea. You should have this ready before you even go to the bank so as to speed things up and demonstrate how serious you are from the very beginning.
As you can see, getting your loan approved doesn’t have to give you a headache. The most important thing is to keep things in order and stay level-headed. Dealing with loans and paperwork can often be mentally exhausting, but it’s worth it for the long-term wellbeing of your business. We’re confident your application will be approved and that you won’t have any trouble in the future. After all, if you can handle your kids, you can handle a loan. Hopefully, your business will get where it needs to be faster and more painlessly with these tips!