Thinking of getting a business loan but clueless about the process? You’re not the only one. There’s tons of paperwork and computations involved. And then there’s some sweating on the decision of the bank or lender. Luckily, the entire loan application processing system just got progressive. Now there are alternatives allowing you to break through the conventional barriers. But here’s the overall picture:
Dealing with Banks
First off, remember that the bank actually wants to approve you. They certainly want your application to be successful. After all, one of their major revenue sources is the interest you’ll pay. But of course, that’s also the number one thing they need to get out of the way – that you actually have the ability to pay. Proving that you can be trusted with a loan after presenting a good business case, is your part in getting a business loan.
As you may already know, there are several requirements for applicants of new business loans, including:
> balance sheets and income statements of the most recent two years;
> updated financial statements;
> a project plan that details the direction your business is headed in; and
> tax returns and bank account records to back your income statements.
Modern Accounting Software
If you use modern accounting software, you don’t have to pull up any of the mentioned documents. The software will produce all information vital to applications for business startup loans, such as income and expense reports, growth patterns, and forecasts. And if you use software that has been configured with bank feeds (this means your income and expenditure information will be accessible right from your business account/s), the loan officer will find your information even more reliable.
Presenting a Good Business CAse
As mentioned previously, getting approved for small business startup loans requires convincing the bank that the business is worth a bet. To do this, you have to understand how bank people think. What is risky for them, for example? What are strong and weak arguments for them? Knowing the answers to these questions allows you to tell your business story in ways that increase your chances of getting the loan. Asking an accountant for help can be an invaluable step.
Immediate Small Business Startup Loans
Lastly, there’s a welcome new type of lender these days that goes over your application online and provides access to capital in an instant. The idea is that these lenders would like to know more about your business’ future and not its past. For example, they don’t have to check your credit score. Instead, they will use some analytical tools and start studying your business, and whether or not it will likely succeed.