For any business needing a loan, its owners know the complexities of the process. While banks are eager to help businesses, there are numerous variables involved that can make things much harder. However, by knowing this upfront, businesses can take the steps necessary to make getting a loan much easier. If you need a business loan but want to ensure the process goes smoothly, here are some points to consider.
Maintain Good Credit
With any bank loan, the lender will examine your credit history before making any loan. Therefore, make sure your business maintains good credit prior to asking for a loan. Since most businesses will need to show a lender they have been profitable for at least the past three years, maintaining good credit will allow you to have sufficient collateral to cover the loan, preventing you from having a lien placed on your home by the bank.
Use a Local Bank
If you want to have the best chance of getting the loan you need, consider using a local bank. Some companies, like LCNB National Bank, know that whether you need financing for equipment, a loan for new construction, a bank is a good idea. If you are looking to move to a new location and need a commercial real estate loan, a local bank will be more willing to listen to your story and work with you to approve the loan. Dealing with local institutions will yield much better results.
Don’t Be Afraid to Tell Your Story
For many businesses, the biggest mistake they make while at the bank is not being willing to speak up to the loan officer as to why they need the loan. To have a much greater chance of success in getting the loan, don’t be shy about telling the story of your business. For example, if you’re expecting to complete a deal with a major retailer or can show how your particular industry is experiencing growth, pointing this out could make the difference between approval or denial.
Consider a Line of Credit
Similar to a business loan, a bank may be more willing to extend you a line of credit to help with financing. While this can help finance short-term projects, the downside is interest rates may be twice as much as traditional business loans.
By taking all these factors into consideration, you will greatly improve your chances of walking out of a bank with the money you need, rather than wondering what to do next.