The financing part of starting a business can be completely overwhelming. From finding a lender, all the way through the application process, until the sweet (or bitter) end of approval or rejection, the whole thing can wear a person out. While it may seem that getting a startup loan or any type of business loan is as simple as filling out an application and having the right credit score, there really is more to it. The lender has to be convinced that the business, under your ownership, will be successful. Following are some tips that can help convince them of just that.
You Have a Plan: Let Them See It
A professional business plan is a definite must when it comes to the loan application process. While it is not necessarily vital that it be written by a professional, it does need to be professional in appearance and be put together in a professional way. It should contain a summary of what the business will be, including location, and your qualification to run such a business. If there is really nothing in your education or experience that would show a lender this, that is not the end. Passionate entrepreneurs can show that they have a plan to fill in what they lack in the way of experience and education and still stand a chance. If you are not good with the financial side of running a business, show them that you are hiring someone who is, like a bookkeeper or accountant, or that you are taking a business accounting class. If you see a need for a bakery but cannot bake, show them that you have lined up a great baker to work for you.
A business plan must also include market research. This will include, among other things, why the location was chosen, information on direct competition, and demand studies that have been done. The Small Business Administration offers a template for business plans that are a great starting point for someone who has never written one before, and it is not a bad idea to consider having a professional business plan writer put it all together if at all possible.
Put Your Best Foot Forward
For many this is simply common sense, but for some not so much. Every single time you meet with a lender, talk with them on the phone, or communicate in any way you should be professional and polite. This means dressing in a professional manner and using manners. These things matter for two reasons. For one, how you treat your customers will make a difference in your success, and lenders have no reason to believe you will treat your customers any differently than you treat them. Also, lenders are only human, and it is near impossible to separate personal feelings from business completely. Do you really want any feelings of distaste for obviously unprofessional dress or behavior to complicate the approval process? Leave the sneakers and t-shirts at home. Wear a suit or at least nice slacks, smile, and be polite.
Let Your Passion Shine Through
Let them see your passion for the business. Reading it in the business plan is not the same as hearing it from your mouth and seeing it in your eyes. Let your excitement show, as well as your knowledge about what you a trying to do. It can make a difference.
Lenders need to know that you are invested in the business as well. They want to know that you will be there, actively managing the situation on a day to day basis, at least in the beginning. If this is not the case, show them how you intend to keep your arms around things. Not only do they want to know that you are invested physically, they want to see that you are invested financially. This may be in the form of collateral for the loan as well as your own money paired with the loan funds being used to start the business.
While the loan approval process can be nerve wracking, these tips along with the right financing product, lender, and credit score could be just the thing to get you the startup loan you need to get your business up and running.