Running a small business can be rewarding but stressful since you are likely doing everything you can to make sure you stay financially afloat for the long term. One way that a lot of business owners attempt to give themselves some breathing room is by obtaining a business loan. But, attempting and actually securing a business loan are two different things. Lenders don't just hand out business loans like candy, after all. You need to prove that you are a worthy candidate. Here are 3 tips to help the lender or bank see things your way.
Develop Your Track Record First
One mistake some business owners make when attempting to secure a loan is heading to the bank before they've really established a significant history with the business. Banks just don't hand out money to anyone with a great idea. They want to see that you have your finances in order and have a business model that is profitable. Ideally, you'll want 2 to 3 years of positive history before attempting to ask a bank for a significant loan. You'll also want to check things like your own credit history and score to make sure everything is accurate before applying.
Understand Local vs. National
Banks, for the most part, will stick to a strict set of standards when determining loan eligibility, but you may be able to win some brownie points if you are a local business applying to a bank in your neighborhood. It can help your case immensely if the loan officer has already heard of your business and knows that you are well established in the community.
Make Your Pitch
Even if you are local and have an established financial track record, you'll still need to tell the bank why you want the money. Have a good pitch put together in which you make clear what you are going to use the money for. Ideally, say you want the money to grow the business or something else that is going to dramatically increase profits over the long term. For example, you may be partnering soon with a major retailer but need the extra money to scale your business so that you can fill all of the orders in a timely fashion.
When applying for a small business loan, you need to go into the meeting with the loan officer with a good game plan. You should have an established financial record and a profitable business before you even set foot in the bank. If a national bank turns you down, head to a local one that might have already heard of your business and might be more likely to cut you a little slack. Finally, make clear what exactly it is that you intend to do with the loan. Reach out to a local bank or lender like those found at American National Bank Of MN for more information.