This document provides 18 tips for strengthening a business loan application. It recommends examining personal and business credit scores, paying off existing debts, avoiding liens, applying when cash flow is strong, providing a detailed business history and plan, being realistic in projections, saving a nest egg, choosing an appropriate loan amount, calculating monthly payments, asking questions, getting collateral appraised, being patient, leveraging social media, selecting the right lender, asking for help, and paying attention to final details. Following these tips can help optimize the application and increase approval chances.

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18 PROVEN WAYS TO
HELP YOUR BUSINESS
LOAN APPLICATION
SUCCEED
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Every small business owner needs money at some point—whether for operational
expenses or to benefit from an investment opportunity. Even for business growth
and expansion, a little extra cash can make a lot of difference.
For most small businesses, it means filling out a business loan application. For
most small business owners, filling out loan application can be frustrating and
time-consuming. According to a SmallBizTrends, around 39% of small business
that apply for business loans from alternative lenders get rejected, though only 1
out of 5 applicants able to qualify for funding from traditional banks.
To make the loan application process easier and smooth, we’ve have listed 20
proven ways for you to strengthen your business loan application, so you have
the best chance of securing the needed funding for your small business.
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1. Why You Need One
Do you want to buy new inventory to
fulfill a new order? Do you want to
hire new staff? Do you need to
invest in an expansion opportunity?
Do you want to expand your
offerings? Do you need to open a
new location? Do you want to
refinance your business debt? Do
you want to run a new marketing
campaign for a new project? Do you
want to establish a business credit
history rather than using your
personal credit for your business?
The better you explain the reason of loan and about
your business, the sturdier your business loan
application will be. Before making an application,
ponder on why you need a loan in the first place and
exactly how you’ll use the money.
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Irrespective of the reasons, why you
need a loan for your business
should contributes to your bottom
line. You should also explains why
your business is worthy of a loan
and competitive, too. If you’ve
successfully used a loan earlier, talk
about how you managed it, and for
what purpose along with the
repayment. All these little things can
make a difference in getting approval
from lenders.

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2. Examine your Credit
Scores
You should have absolute knowledge
about your business and personal credit
scores. You can check your business
credit score by requesting a credit report
from credit agencies like Experian,
Equifax, or Dun & Bradstreet. To check
your personal credit score, you can visit
Equifax and CreditKarma website free.
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According to State of Online Small
Business Lending report, a business
owner’s personal credit score carry more
value in deciding the loan APR. A
frequent check of your credit scores will
help you assess your current financial
standings and help you prepare early for
a business loan application.
Credit score is the major factor lenders
consider while evaluating business loan
applications. A credit score of 550+ is
essential to qualify with most lenders,
and above 640 is favored. The credit
scores are used to evaluate borrowers’
creditworthiness, as well as the terms of
the loan.
Mistakes can happen and credit agency can make that too,
If you find any errors in the report, you’ll need to contact the
bureau (or the collection agency) in writing to dispute them
in time.

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3. Pay-Off
Existing Debts
Credit scores are determined based on different factors such as the number of
accounts you have, the types of accounts, used credit vs. your available credit,
the length of your credit history and your payment history.
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Your payment history is considered the most influential factor: regardless of
you’ve paid your bills on time or not. No matter how good your credit score
was, a single late payment can drop your score by up to 100 points.
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So, before you apply for a business loan, try as much as you can to pay off
your outstanding debts. Awkwardly, they’ll still appear on your credit report,
but this will conserve them from damaging your credit score.
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4. Avoid Liens on
Business
Having a lien on
your business
signifies someone
has a claim on your
business assets
because you default
on their loan. A lien
can be a tax lien,
which the IRS has
placed and the UCC
(Uniform
Commercial Code)
lien, which a lender
or a bank has
placed.
A tax lien can have
devastating effect on
your application,
because it signifies
neither you made timely
payment of your
business taxes, nor you
arrange a payment plan
with the IRS. And this
means it will be almost
impossible for you to
secure financing,
unless you arrange a
payment plan with the
Internal Revenue
Service (IRS). After the
ta payment, the lien will
be remove from your
credit report.
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You might have a UCC lien earlier
when you secured a loan from a
bank or an alternative lender.
Occasionally, businesses might
have a UCC lien without even
knowing it. It is recommended to
have it clear from your report by
requesting to your state’s
Secretary of State Office.

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5. Apply When the
Business is Doing
Well
Bank statements are among the
prerequisites of a business loan
application, and if you apply
during a period when the business
is slow—the statements won’t
demonstrate how good your
business has really been doing.
If your business cash flow fluctuates
during the year—maybe you’re in
small landscaping business and get
more business during the summer
when the services are in high
demand—ensure you make an
application during or just after when
your cash flow is good.
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6. Describe Personal
and Business History
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You started with your business info and the reason
why you need a loan; have it combined with
information about your personal knowledge and
learning for the lenders. This could include your
diploma, professional associations, licenses, and any
professional awards you’ve won over in your career.
You should also describe your business history and
its finances. The more details you provide to lenders,
the better your chances of being evaluated quickly,
since you’re equipping lender with all the essential
information to examine your application as well as
creditworthiness.

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7. Consider Legal
Assistance
Completing a loan agreement can be confusing with so many
complexities involved such as APR, payment and amortization
schedule, payment penalties, arbitration terms, grace periods, late fee
payments, and questions about your business and personal
qualifications. As a borrower, you must provide all such information,
and your ability to provide appropriate and complete information can
matter in securing the loan or not.
If there’s something you don’t understand, or are uncertain to answer,
consider getting assistance from a lawyer to help you with the loan
application fine prints. This will not only saves you time and trouble,
but also money in the end.
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8. Make a Solid
Business Plan
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0405
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BUSINESS
PLAN
Executive business summary01
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Not every lender requires it, but creating
a solid business plan can get you a gold
star and demonstrates a lender that you
are organized, ready, and responsible.
This also demonstrates why your
business needs a loan and how it
benefits your business.
Moreover, it also allows you provide
realistic repayment plans, convincing
lenders that you have a strategy in place
for loan repayment. The following things
should be included in your business
plan:
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Current and earlier business’s finances
Sales volumes
Product lines with prices
Revenues
Organization and management team
Any outstanding debt
Cash flow analysis
Competitors analysis
Strategy and Implementation
Financial plan and projections

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9. Be Realistic
Be realistic in your goals as well as in your loan
application. Don’t get optimistic about high sales and
revenue after securing the loan. The key is to
demonstrate stability and that’s what you should do
by staying realistic.
Keep in mind that when you secure funding, you’re
getting into an agreement with the lender where
you’re bound to make timely loan payments over a
period of time. Don’t make promises you can’t keep,
else you’ll end up hurting your relationship in the long
run.
The most effective way to influence the lender with
your numbers is to demonstrate a healthy cash flow
and that you consistently review your budget to
ensure that you are managing expenses and reducing
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10. Save a Nest Egg
Try to save a nests egg for at least three
months for operating expenses—
including your potential loan payments
when you make a loan application. This
demonstrates the lender that you’re
able to make the payment even if
unexpected happens.
You might be familiar with the
phrase; the more the better. The
same apply here as well. The more
money you have in your business
bank account, the better.
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11. Choose the
Realistic
Borrowing
Amount Be realistic how much you need instead of applying
for more than you need. In order to make your
application a success, it’s imperative to know your
cash needs. Don’t guess or ask for too much,
crunch the numbers before deciding the loan
amount.
Lenders might refuse business loan applications that
require small amounts of money, because the
processing cost is fixed and lenders will make less
money from a small loan than they would from a bigger
loan.
Lenders will be more willing to work with
enthusiastic entrepreneurs that are realistic,
responsible and know how much money they need
to grow and succeed.
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12. Calculate Your
Monthly Payments
Every lender biggest
concern is that “can you
repay the loan?” If you’re
unable to convince the
lender, you’re behind the
eight ball.
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Lenders use debt-service coverage ratio
(DSCR) and the debt-to-income ratio (DTI)
to assess whether a borrower is able to
afford monthly payments or not. Both
ratios demonstrates business affordability
and the risks.
Its advisable to calculate
your DSCR and DTI scores
before making a loan
application. A positive ratio
scores will help increase
your chances of getting
approval. The ratio scores
will also help you discover
your affordability each
month—enabling you be
realistic about your
borrowing amount.

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13. Debrief
Stay attentive and always ask questions to your
loan officer about the payment schedules,
payment methods, and loan fees. This
demonstrates that you’re serious about the loan
process, and also conveys that you’re thinking
every pieces cautiously. A sensible borrower is
likely to run into unanticipated problems like
prepayment fees or hidden charges.
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14. Collateral Appraisal
If you’re preparing to use collateral to apply for a business loan, it’s constructive to have it
independently appraised via a third party. This helps in increasing your chances of approval,
securing low interest rate and more wiggle room.
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C O L L A T E R A L
Generally, the lender will order the appraisal, but Federal regulations state that the appraiser
must be neutral and have no direct or indirect interest in the business. The collateral value
must meet or surpass the amount remaining on loan in order for a loan to be considered
secure.

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15. Be Patient
Be patient after making a loan
application. Higher loans take time to
approve. Therefore, if you need quick
funding in a day or two, there are lenders
that can get you fast business loans,
considering your finances meet a certain
minimum requirement. On the contrary, if
you’re looking to secure the best loan
deal, with lowest interest rates and
flexible terms, be patient in terms of
weeks or months.
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16. Leverage
Social Media
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A presence on social media influences nearly every aspect of life and this includes
your loan application as well. A company’s feasibility is closely linked to social
media activities, so it shouldn’t be a surprise that social media is an important
aspect of business loan application.
Many online lenders, including few banks, are starting to review business social
profiles while making a loan decision, which influences both consumer and
business lending.
While reviewing social media profiles, lenders take into account different
considerations such as your relationship with customers and clients,
products/services ratings, and how devoted you’re in your business. It’s also
beneficial to pay attention to your social media, even outside the context of a
business loan application.
If lenders see what they want to see like quality customer support, positive ratings,
commitment to help customers and response to poor reviews — they consider that
your business has good character.

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Searching and finding the right lender plays an important role in a business loan
approval. There are different lenders offering different kinds of loan products and
has different requirements. Some lenders willing to lend to established
businesses, while some to startups. Some are interested in good credit score,
while some consider business revenues. Therefore, before devoting all your
efforts into completing a loan application, work on exploring lenders and their
lending requirements to understand will you qualify for a loan or not and at what
terms.
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17. Select the
Right Lender

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GET HELP
18. Don’t be Afraid
to Ask for
Extra Help
After all these ways, if you’re still
concerned about your loan application or
require consultation, don’t be afraid to ask
for professional assistance. There are
organizations like SBDC and SCORE that
offer business advice in all aspects and
stages of business, whether you’re just
starting or growing your existing business.
You can also get assistance from your
accountant to have your loan application
and financial documentation in order and
highlights any potential red flags.
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Final
Thoughts
$ $$
We’ve covered eighteen proven ways to
help your business loan application
succeed. By optimizing your business
loan application and understanding
exact lenders requirements, you
considerably increase your chances of
getting quick approval on your loan
application.
www.onlinecheck.com