Launching a business is an exciting time, but it can also be nerve-wracking. After all, a lot is riding on the success of your venture. You probably feel more pressure to make things happen if you need a business loan to get your company off the ground.
Fortunately, there are some steps you can take to increase your chances of getting approved for a business loan fast. By following these tips, you can ease the stress of the loan application process and give yourself the best shot at securing the financing you need to get your business up and running.
Choose the Right Lender
Not all lenders are created equal. Some banks and credit unions might have strict requirements for business loans, while online lenders tend to be more flexible. Choosing a lender who explicitly offers loans that meet your business’s needs would be best.
For example, if you’re looking for a small loan to cover startup costs, you may want to consider an online lender like Kabbage or OnDeck rather than going through a traditional bank. These online lenders are typically willing to work with businesses that don’t have perfect credit or extensive financial histories because they understand that startups come with unique challenges. As such, they may be more likely to approve your loan application quickly.
On the other hand, if you’re looking for a large loan to finance the expansion of your business, you’ll likely need to go through a bank or credit union. While the application process may take longer, you may be able to get a lower interest rate on your loan thanks to the relationship between your business and the lender.
By making a smart choice about which lender to go through, you can give your business loan application a boost from the start.
Know Your Credit Score
One of the first things lenders will look at when reviewing your loan application is your credit score. This number represents your creditworthiness and gives lenders an idea of how likely you are to repay any debt you take. A higher credit score indicates that you’re a low-risk borrower, while a lower score suggests that you may be more likely to default on your loan payments.
If you’re unsure what your credit score is, now is the time to find out. You can get free annual credit reports from the three major credit reporting agencies—Experian, Equifax, and TransUnion—or use a free credit monitoring service like Credit Karma or WalletHub to keep tabs on your score. Once you know where you stand, you can work on improving your credit, if necessary, before applying for a business loan.
Many websites provide guides on how to fix credit score. Especially if you have a lower score, taking steps to boost your credit before applying for a business loan can increase your chances of getting approved.
Gather Your Supporting Documentation
Once you’ve chosen a lender and decided which type of loan is right for your business, it’s time to gather the documentation required to apply. It typically includes tax returns, bank statements, identification documents, and financial projections for your business.
The accurate documentation required will vary by lender, so don’t hesitate to ask in advance to get everything together before submitting your application. The more prepared you are, the faster the process will go since there won’t be any delays while awaiting missing information from you.
When gathering your documentation, it would be best if you could keep copies for your records. This way, if there’s any confusion about the information you provided or what gets asked of you, you can refer back to your documents and clear things up quickly.
Follow Up After Submitting Your Application
After you’ve submitted your loan application, you must ask about the status and follow up as needed. Some lenders may require additional information or documents, so it’s crucial to respond promptly to avoid delays in the process.
At this point, you’ve done everything possible to ensure speedy approval of your business loan application. So, all that’s left to do is wait for a decision from the lender. However, you shouldn’t just sit idly by—you must show your eagerness and excitement about the loan by continuing to follow up with the lender until you receive an answer.
But that doesn’t mean you have to become a nuisance; simply make sure to check in every week or so to get an update on the status of your application. After all, the sooner you’re approved for a loan, the sooner you can get the funding you need to grow your business.
No one likes waiting weeks or months to find out whether they’ve been approved for a loan—mainly when their business depends on it. By understanding what lenders are looking for and gathering all the necessary documentation upfront, you can streamline the process and put yourself in a position to get the financing you need as quickly as possible.