When applying for a small business loan, it’s smart to keep in mind the advice to “Think twice when you decide to speak.” Regardless of what type of loan you’re searching for, you’ll improve your odds of getting your loan application approved by staying away from these 7 things you shouldn’t tell a lender.
- Haven’t Filed Taxes Yet
Typically, lenders will consider the previous two years’ tax statements before authorizing financing. In case you haven’t filed your tax statements, lenders will not have the ability to confirm your last year’s revenue.
- Not Sure How Much You Need
Lenders need to notice that you’ve considered just how much cash you’ll need and just what you will use it. This ought to be supported with information such as the price of the equipment you’ll purchase; the building you will buy or even the material you will order with the cash they offer.
- Getting Extra Cash
Getting more cash than you’ll need may appear just like a wise idea. Remember, lenders deal with a lot of companies just like yours, therefore if your figures are out of order with industry averages, they will consider you do not have any idea of what you are doing.
- Don’t Know About Business Credit Score
Generally people understand how to keep an eye on their credit rating. However, many entrepreneurs have no idea about their business credit rating or perhaps realize they’ve one. Start checking your business credit score the moment you start your business. D&B and Experian are two of the sites to help you check your business credit rating.
- How Much To Invest In?
Every lender will wish to examine that you have put some of your own cash into your business. In the end, if you don’t have your cash invested in your business, why should they? Do everything you can to develop a minimum of 20% of the startup cost you’ll need to be able to start your business.
- Don’t Have A Business Plan
No matter if you are financing a startup business or even an established business, lenders may wish to see some form of strategic business planning to demonstrate you have considered how to increase your business and just where you’re going to invest their cash. If your business is already ready to go, get your old strategic business plan updated, or make a new one. If your business is a startup, a strategic business plan is efficacious for a lot more reasons than simply getting financing, so don’t skip this task.
- Overly Optimistic Projections
Lenders see excessively positive forecasts from startup business owners constantly. Getting 1% of the massive marketplace is very hard in a market that is large; you will have a huge competition. Writing a strategic business plan can help you consider these forecasts, develop better ones and work out how you will advertise your business to get the share of the market you would like.