Getting a loan to start up a new business or support your current one may prove to be a bit more difficult than it once was. Despite the steady improvements within the economy, many financial institutions are still somewhat apprehensive when choosing to grant loans to small businesses or start-up endeavors. In accordance with a recent survey conducted by the Federal Reserve, the standards for receiving an industrial or commercial loan remain high and small business owners still find it extremely difficult to be approved for a loan. No more than 2% of the banks that participated in the survey had relaxed approval qualifications standards for commercial and industrial loans. In fact, some banks were found to have made strict standards even further. In an effort to assist business owners and entrepreneurs in attaining proper capital to either start or grow their companies, the Better Business Bureau has provided a number of tips focused at taking a small business loan by earning your bank?s trust through the development of a solid business plan.
BBB?Small Business Loan Tips
Creating a solid business plan will help to decrease the risk involved with granting approval for your loan. The less risky your loan appears, the better your chances of gaining approval for it are. The BBB small business loan tips are?suggested for? owners who are seeking approval for a small business loan:?
- Confirm your credit report. Your personal credit history is one of the few important elements that lenders will review when considering you for loan approval. Before applying for the small business loan attain copies of your credit report from all 3 credit report bureaus and closely examine them. If you find any errors you should immediately report them and have your credit report corrected before applying for the loan. Even a small mistake on your credit report could be the difference between acceptance and denial of your small business loan. In the U.S. the three credit report bureaus are Equifax, Experian, and Transunion.?
- Contact the U.S. Small Business Administration to talk to a lender relations executive in your state. Studies have determined that individuals who seek the advice of a counselor through the SBA greatly enhance their chances for loan approval. Also , SBA partners may also be of help . These partners and SBA counselors mentor small business owners and entrepreneurs in growing business .?
- Do your research and create a solid business plan that reflects your professional attitude and business plan . Propose a polished presentation regarding risks, opportunities, and future plans. Explain how much you will require in funding and how you intend to put those funds to use. Convey your personal interest in the business and let it be known that you are devoted to its success. Explain your plan for paying back the loan and be able to provide collateral to cover the cost of the loan if your business should happen to fail. A carefully thought out and professionally presented plan will greatly increase your chances for approval.
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