3 Things You Can Do to Improve Your Chance of Getting a Business Loan

3 Things You Can Do to Improve Your Chance of Getting a Business Loan
  • Opening Intro -

    Credit usually plays a central role in funding a business, yet so many people still have a very vague idea of how business credit actually works.

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As a matter of fact, a recent study found that around 60% of small business owners said that they had no idea where they could find their credit score, while around 70% said that they didn’t know what it was.

A lot also don’t understand what affects their chances of getting financing, or why they were rejected. But usually, it’s easy to see why when we understand the process, and take the steps necessary in order to become more attractive to lenders. Here are some of the things you can do to increase your chances of getting a business loan.

Know Your Credit Score and Work on Improving it

The first thing that you need to know is what your business credit score is. You can get it from the 3 major business credit reporting agencies: Dun & Bradstreet, Equifax Small Business, and Experian Business.

These people will look at things like your payment history with vendors, business demographics data, public records, and a variety of other metrics.

Once you know what your credit score is, you have to take the steps necessary to turn the situation around.

This could mean getting a secured credit card, and asking vendors that report activity to credit reporting agencies to give you net thirty-day credit lines at least to help you further improve your history.

If you want to learn more about building and maintaining your credit, as well as more information on the credit scoring process, you can check this business credit guide at https://advancepointcap.com/business-credit-guide/.

Explore all Your Options

You also should look at all the options that are available if you want to increase your chances. Your local bank might not be the best choice, even if you’ve been with them for a long time.

Consider looking at credit unions, and pick those that have a reputation for helping small businesses. Look at alternative lenders online as well. Many of them will look at other factors to gauge the health of your business, and see if you’re as risky of an investment as your credit score says.

Have the Right Reason for Taking Out a Loan

Financial institutions do not like to lend money for lavish goals that don’t foster growth. So, if you were thinking of using the money to buy property, or do some renovations that are not guaranteed to bring back value, then chances are you’ll get turned down if you don’t have the credit.

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So, if you want to have a realistic shot at getting approved, you have to show that the money will be used to invest in assets that will help your business get more profits.

As you can see, there are tons of things that you can do if you don’t have as good a business score as you’d like. Make sure that you follow these few tips, and always look for ways to make your business a good bet for lenders.

Image Credit: getting a business loan by Pixabay

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Consumer Tips reference:

GUIDE: getting qualified for home loans

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Categories: Business Financing

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