During present times it is rather easier to acquire small business loans and business cash advance but due to lack of research they tend to make the wrong choices. A problem usually occurs in the application process as lenders ask for documents required in applying which are often not prepared or completed.
Small Business Owners Make Mistakes
Small business owners with young businesses tend to make basic mistakes while choosing the right funding company and also while choosing the suitable loan program for their small businesses.
• Choosing The Wrong Companies for Loan
Instead of researching and finding the most suitable loan providing institutions most small business owners depend entirely on what their friends suggest. They are often misguided, due to which they lose most of their money in repaying large interests rates ending up in debt.
• Vague Business Plan and Loan Proposal
While planning to enter the next phase of your business you cannot just move forward without a plan. If you have a plan in mind then you need to write it down so that it can be evaluated by professionals.
With that comes a loan proposal which reports about you and your business, your future business plan, your financial requirements, how much money you require, how and where will you use it. How you intend to pay back the loan, and what your plans are if you are unable to pay it back.
• Lender’s Application
This is the application of trust between you and the money lending institution. Even if you have a bad credit history, specify only the truth in your lender’s application. Omitting details may be extremely unprofessional on your part.
• Financial Statements
Be ready with your two years of tax records and two years of Business and personal bank statements when applying for a small business loan. Though you may not require them immediately but eventually, yes you will need them. If you don’t have an established business already, then your personal tax record and personal bank statement will help you in creating a trust with your lender as being a reliable and responsible individual.
What should be done?
Not every loan gets approved. But assuming that large percentages of loans get rejected without any reason is a farce, we need to dig deeper into the reasons instead of finalizing a hypothesis. In case your loan application is rejected, then you need to find other sources of funding and prepare a better case for yourself.