A business loan can help you stay afloat or grow, both of which are positive paths for anyone who is trying to run a business long-term. And business loans can be very open in terms of what you can use them for. However, getting a business loan isn't that easy, and you want to get your situation into shape so that you have the best chance of getting the loan you want. Before you fill out that application, make sure you are able to present the lender with a solid, stable picture of what you'll do with the money.
Write up Specific Plans for Using That Money
First, create a specific business plan for that money. If you're planning to use it to buy property, upgrade equipment, expand your business to a new location, or something else, write that down and provide numbers, such as how much each piece of upgraded equipment will cost. You want to give the bank a blueprint that shows your intended plans and how you'll carry them out. The business plan should be realistic and show exactly how you plan to run your business over the next few years as you pay back the loan money. The bank wants to know that you know what you're doing and didn't come up with pie-in-the-sky dreams that haven't been thought through.
Show an Overall Pattern of Increasing Income
Business income has ups and downs, and even very successful, stable companies can have the occasional drop in revenue during a quarter. However, you want to show the bank that your income is overall increasing or is at least somewhat stable, with drops in revenue followed by increases that bring it back to its average level. Banks don't really want to lend to businesses that can't show stability overall because the chances of getting the loan money back are lower.
Now, the pandemic years have changed this a little. Many businesses had major drops in income or major fluctuations. If that describes what happened to your business, too, then try to show that in the past few months, things have gotten better and are continuing to move along at a nice speed. Some lenders may still not like that, but others will understand that 2020 and 2021 were very odd years for everyone, and they may overlook some down months.
Make Sure Your Personal Credit Is in Good Shape
Lenders of business loans will want to know about your business' credit. Some may also want to know about your personal credit, as you're the person who would be in charge of getting and then paying back the loan. Make sure your personal credit is good. Work on that credit score and pay down your own debts. If it looks like you won't be able to make things look stellar before you need the business loan money, talk to the lender about what they really need to know and how to work around a slow but steady improvement.
Business loans are so very helpful, and to be approved for one is a happy occasion. Give yourself the best chance possible of getting that loan.
For more information on business loans, contact a company like MidwestOne Bank.