Thinking about starting your own small business? According to the Small Business Association (SBA), there are approximately 27.9 million small businesses, and 18,500 firms with 500 employees or more operating in the U.S.
Among other things, you’ll have to pay for the business licenses, insurance, lease, utilities, payroll, marketing, tools, and on-going training. It’s not uncommon for some entrepreneurs to spend tens of thousands of dollars just to get their business up and running. The good news is that you can apply for loans at various banks and financial institutions, but the bad news is that you won’t always get approved.
If banks approved each loan application they received, they wouldn’t be able to stay in business. When lending money to entrepreneurs, they want to know it’s going to a well-structured business with a clear strategy and objective. After all, they probably won’t get their money back if the business fails. Understanding this principle will help you make smarter decisions on your loan applications; thus, improving your chances of approval.
Apply For The Right Loan
To boost your chances of approval, make sure you apply for the right type of small business loan. There are several different types of small business loans, each of which is designed for a specific reason. For instance, there are startup loans, business acquisition loans, debt consolidation loans, etc. Ask yourself – how do I plan to use this capital? – and then choose the loan that best fits your professional needs.
If your goal is simply to pay off credit card debt that you acquired from launching your business, then you’ll want to apply for a debt consolidation loan. These loans are incredibly helpful for a number of reasons; they’ll consolidate some (or all) of your debt into a single convenient loan. Rather than sending half a dozen or more monthly payments to your debtors, you can make a single payment to the loan lender. And depending on the terms and conditions, a debt consolidation loan will probably have a lower interest rate than most standard credit cards.
You can’t expect a bank or financial institution to lend you money for a small business if you show up in casual attire with no real sense of professionalism. Before meeting with any lenders, gather all of your documents and financial records pertaining to the practice. Even if your business is still in the works, you can draft up projected sales and revenue with the help of an accountant. This shows banks that you are serious about your business, and as such, they’ll lend you money with more confidence.