Adhere 5 Aspects to Get A Business Loan
Every business whether it is small or big will need funds to operate a business successfully. As a business owner, you may reach the banks applying for business loans at least once in the lifetime of the business. Banks follow some protocol to approve the loan application of the borrower. They use 5c’s credit analysis to determine your eligibility to get the loan. You will be able to get the required funds for your business through loan only when you qualify these 5c’s. Make sure your business loan application adheres all these 5 points to increase the chances of loan approval.
The first “C” the lender look in your business loan application is your capacity to repay the loan. You should make sure you attach all your income statements from the past two years to let the lender know your repayment capability. You should also include cash flow statements and need to indicate the time at which you plan to repay the loan Capacity also mean your credit score. Both business credit score and personal credit score should be good to get a business finance from the lender. Indicate every possible source repayment at your disposal to get your loan application approved.
Collateral is another aspect that lenders look in while approving your business loan. To stay more assured about the repayment of the loan, the lender asks for some security. Collateral can be anything like property, building, home, business equipment. Collateral also can be some form guarantee from the co- signer who assure the repayment of the loan in case you default it. Make sure that co- signer also has good credit score. Some lenders may ask both collateral and co-signer to approve the loan.
The lender will look at the investment of the business owner even before even the lender considers making a loan application. Your investment in the business before applying the loan is one of the key consideration of getting the loan. After careful analysis of the amount invested in the business, the lender will qualify the loan that has to offered to the business owner.
It is important for you to present detailed loan application to the bank. During the time’s tight credit, small business owners will find it difficult to approve the loan and banks will have a tough time in offering the credit. To add strength to your business loan application, you should spell out the purpose which the loan is used for. List out the need, whether you are using it for working capital, buying equipment or expanding the business.
Apart from all these things, banks do consider your trustworthiness and ability to repay the loan on time. This is where your experience in the industry and your ability to generate success comes into the picture. The financial officer gives due consideration to your references and experience in the industry to approve a loan.