Commercial lending solutions are notoriously difficult to obtain, particularly for small business ventures. But if you know what bankers are considering when you apply for business loans, you have a much better chance at getting the business funding you need. If you are a small business owner who is hoping to secure startup financing from big commercial lending institutions, keep reading below to learn what it takes.
Bankers want to know your personality. They want to know you have character. Obviously, being a good person alone is not enough to get you the startup funds you need. However, it can make or break your chance at receiving commercial lending if the banker is undecided. Make sure you are on your best behavior. Bring your best self to your loan interview. You may be pleasantly surprised at the outcome it brings.
Obviously, lenders need to see your finances before lending money. These lending institutions need to be sure that you have sufficient assets, financial reserves and/or personal collateral to make loan payment even when business is slow. For example, you can borrow using a certificate of deposit as collateral. Lenders will also be checking your personal credit score. In addition, they will need to check your business credit score if you have already established one. Make sure you have your personal finances and business finances in order if you want to be one of the lucky few to get small business loans from the bank.
Your Track Record
If you have previously owned a business, you will need to prove you have a track record of profitability and success. Commercial lending is notoriously hard to get. Lenders are not going to accept loan applications from business owners with no track record over business owners with a history of success and high earnings. There is simply too much competition out there. Make sure you have evidence of previous business success to show potential lenders. This will help you increase your odds at getting accepted for a small business loan from a bank.
Lenders will want to be sure that you have knowledge of the market you are attempting to break into. They will expect you to know what types of business competition you will be up against. Obviously, they will also want you to have some sort of response as to how you will outperform them. If you have a business plan that includes a market analysis, competitive analysis, economic indicators and other types of in-depth research, lenders will be much more likely to give you the business funds you request. It shows effort, dedication and professionalism, which demonstrates that you are ready to own your own business. Especially if you have a business degree, an MBA might be worth mentioning. Make sure you have the industry, competition and market knowledge you need to succed when you visit your nearest bank to apply for a business loan.
Commercial lenders will also want to know what your business plans are. They will want to be able to verify that your venture is a viable business model. Make sure that your business ideas are realistic. Know what the strengths, weaknesses, risks and opportunities of your business plan. This way, you can anticipate any questions these lenders have for you and come up with the best possible responses ahead of time. Of course, show them what GSA contracts you are competing for. If your business ideas are realistic, you will be much more likely to get approved for the commercial lending solutions that so many entrepreneurs are competing for.
If you are a small business owner looking for small business loans to fund your next venture, let this post help you out. Commercial lending is tough to secure, especially for small business owners. However, there are certain elements that every lender will consider in their decision. Make sure to prepare using the tips above. Knowing what these commercial lenders are looking for will help you prepare for the loan application meeting that you have been dreading. It may help you get access to the small business loans you need to fund your startup in the quickest and easiest manner. Let us know how it works out for you in the comments below.
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