Business Loan Application

Going through the entire ordeal of applying for a business cash advance or loan is not easy and clear-cut as applying for a home loan or a personal loan. This is most likely due to the fact that business loans are more of a default risk. Therefore, lenders need to exercise greater caution and emphasis when evaluating business loan applications in order to minimize their risk exposure.

Knowing this, banks and private lenders evaluate the applicant on the solely on the information that is provided and also the risk and profitability of the business. They need to know this because if your business does not seem profitable, you application will be denied.

The 1st step of a business loan proposal is an detailed summary of the type of business and the industry, the purpose and application of the loan, how the loan will be re-paid and the estimated loan period.

Next you have to sell the lender with the nature of the business, the location of the business, company history, what products the company or business offers as well as key differentiation factors of the company or the product, the general growth of the industry, competitive information, growth potential and target customers.

It would be wise for your company to include its marketing strategy, detailed product information, historical information as well as projected growth plans for the company. Besides that, if you plan to incorporate product or service extensions in the future, you should provide these descriptions within your loan proposal. If possible, geographical expansion plans will help in the proposal.

 

 

Many people get rejected for loans simply because they do not fill out the credit application correctly. Bank loan officers read an application to try and get a picture of the applicants background and their likelyhood of repaying the loan. Think of it this way. When you fill out a credit application you are painting a picture of yourself. You want to paint a picture that you can afford the loan and that you will repay the loan. After all, bankers want and need to loan money to earn their living.

How can you improve your chances?

* The first thing is to outline a chronology about previous addresses and employment. You should prepare a 3 year history. Explain any gaps in employment.

* Be accurate. Get correct phone numbers, street numbers, dates, earnings, rent amounts Many bankers call and verify information as part of their investigation. Don't guess.

* Research past bosses and landlords. Get their current contact numbers. Get their permission to use their names as references.

Bankers use credit scores, the information in your credit report, and your credit application to approve or disapprove your loan application. I have seen bankers turn down loans just from the information on a credit application. When they find errors or incomplete information it often times sends a signal to bankers that they should pass on an applicant. I have also seen good credit applications carry a bad credit score to approval. The banker may have found bad information on a credit report but the application just painted a picture that the applicant deserved a second chance so the banker investigated all the information on the credit application and found a way to approve the loan. Take your time, be prepared, be thorough and accurate.