Starting a business requires capital, and coming up with capital usually requires applying for a loan. While borrowing money isn’t always glamorous or easy, it’s often the best choice for anyone looking to get a company off the ground. If you’re looking to take out a small business loan, there are a lot of things that can improve your chances of getting approved, and also a handful of things that might make it harder for you. Here are six things that you need to avoid when applying.
- Missing Details
When you ask a bank to give you money, it’s a safe bet that the lending agent will want to know exactly how that cash will be used. If you’re at all unclear as to how you’re going to invest the borrowed capital and then pay it back, giant red flags will be raised. Be ready to present a thorough business strategy.
- Lacking Confidence
If someone asked you to invest your money in a project they said had a 50/50 chance of working out, would you break out your checkbook? You probably would not. The same will be true if you don’t seem absolutely certain that your business concept is brilliant and will be a huge success.
- Fuzzy Math
You should have an exact dollar amount for your small business loan. While you might not get that amount, what’s most important is proving to the lender that you’ve crunched the numbers and have a clear idea of what you need.
- Subpar Paperwork
An application that’s filled with errors or incomplete is not something that will inspire much faith in a potential lender. Remember, you’re asking this investor for thousands and thousands of dollars. The least you can do is fill out the forms correctly.
- Being Unrealistic
While you need to be confident and you need to have an exact idea for how much you’re borrowing, it’s just as important that you not approach a lender with an outlandish proposal. Make sure your business concept is at least feasible.
- Zero Personal Equity
If you expect to borrow funds, you need to have at least a little capital of your own. No one will want to invest in your company if you’re not willing to do the same.
You have to be diligent and tactful to get a small business loan. Before filling out an application, make sure you aren’t guilty of these common occurrences that cause many requests to get denied.