Acquiring unsecured business funding can be a daunting task, but the rewards will benefit you and your business. Small businesses provide approximately 55% of all jobs, and account for approximately 54% of all sales in the United States. Small businesses are just as much in demand as larger corporations, and they help the economy thrive. This is the reason small business loans are becoming increasingly popular. Follow these tips to prepare before applying for a small business loan.
Go in Prepared
Ensure that you are completely prepared when you ask for unsecured business funding or an unsecured business loan. Proving that loaning money to you for your business involves minimal risk is your biggest challenge. Ensure that you complete the application and are prepared to show things such as the cash flow for your business and financial statements. These should reflect your business practices for the past three years.
Don’t Lie on the Application
Do not stretch the truth or lie when filling out the application for a small business loan. Potential lenders can and most likely will check all the facts you have included on your application. Any statements that you can not support with solid facts, such as bank or financial statements should not be made. Include all numbers, past and projected in your application.
Be Ready to Discuss and Answer
All businesses involve risks. If the risk is not discussed then your funding expert may assume that no thought has been given to risks within your company or business. Although nothing can be planned perfectly and no one can plan for everything, attempting to plan for unforeseen circumstances will show that you are planning for risks and attempting to minimize them and preparing to properly manage them should they come up.
Know What Questions You Will be Asked
How much money do you actually need? Know this amount and stick to it. Be exact and thorough in your answer.
What do you plan to do with the money? Be specific with funding experts when asked this question. Allocate how much will be spent of assets, debt payment or operational costs.
How long do you need the money and when and how do you plan to repay your unsecured business funding loan? Explain what the money will do for your business. Know a repayment period based on cash flow for your company.
Remember that First Loans are the Hardest to Get
Many times financial institutions feel more comfortable lending money to repeat borrowers. Once one loan has been paid back in full, subsequent loans are easier to get. Lenders do not favor high risk loans no matter how much profit your business has or is projected to have in the near future. Low risk borrowers are the preferred customers for lending institutions, therefore if this is your first loan prepare for more work on your part to convince your lender you are worth the risk.
Always make sure to repay your loan on time. Despite the amount of money that is borrowed, your lender will report to all three credit bureaus. This can either hurt or help future loans. Pay back your loans on time and in full to make future unsecured business funding loans easier to get.
