It should come as no surprise that it can be difficult for small businesses to grow, hire, and take advantage of new opportunities without injecting some cash into what they’re doing. Whether that’s paying for staff, developing new products, marketing the business or innovating something, any of these can take money to complete.
However, as a small business owner, this is money that you might not have access to straight away, which means you may have to apply for a small business loan from your bank, credit union, Small Business Administration lender, or local CDFI (like Pacific Community Ventures). Of course, if you don’t fill in a compelling and attractive application that your lender doesn’t love; you may not get the money.
Today, we’re going to explore six of the most important tips you need to remember when it comes to filling out and completing your small-business loan application, ensuring you maximize your chances of securing the finances you need.
#1 – Tell a Story
There’s nothing more boring to a loan advisor who reads through dozens of loan applications per day than a boring loan application that doesn’t engage or sell the business to them. If you can’t attract a loan advisor, how are you going to attract customers?
“The best way to overcome this is to tell a story about your business. How did you get to where you are today, what do you do, and what do you plan on doing with the loan money? Show you have character and you stand out in a way that attracts advisors and enthralls customers”, – explains Charles Cornell, a Financial Adviser at Academized.
#2 – Go into Detail
Since the economic collapse several years ago, many banks are a lot more dubious and cautious about who they’re giving their money to, so you’ll need to include details to make sure they understand what you’re doing and who you are.
Throughout your loan application, you’ll need to make it clear what you do (as with your story), who your customers are, whether you’re prepared to use collateral to secure the loan and any other details that are relevant to your business.
#3 – Get Your Accountant Involved
Whether you have an in-house accountant, or you use an external account to manage your affairs, you’ll need to get them involved when it comes to filling out your loan application. Every single business is a unique business, so it’s difficult to say exactly what the best approach for you is, but your accountant should know.
They will also be able to help you manage your repayments and calculate forecasts with you as to whether taking out a loan is a good idea for your business, or whether it’s too much of a risk.
#4 – Use Business Writing Tools
Imagine you’re a loan advisor and you’re reading through a small business loan application that’s full of mistakes and errors. If they can’t write a decent loan application, how can you expect them to run a business effectively?
Accuracy and professionalism is important here, so here are some tools that can help you achieve it in your application:
- My Writing Way / Revieweal – These are two online tools that can help you format your application professionally.
- Ukwritings / Oxessays – Use these two online editing tools to ensure your application sounds professional and reads comprehensively.
- Academ advisor – This is an online blog full of business copywriting guides to help you improve your business writing skills.
- Australian reviewer / Eliteassignmenthelp – These are two leading proofreading tools to help you ensure that your application is completely free from errors and mistakes.
- Writingpopulist – Use this online tool to help check and correct your grammar and provides tips for improving your grammar skills, as reviewed by BestAustralianWriters.
- Venturize is a nonprofit resource from Opportunity Finance Network and Small Business Majority
#5 – Sort Out Your Credit Rating
One of the most important factors your small business loan is going to rely on is your credit rating. If you haven’t got a good credit rating, you could be rejected altogether, or you’re going to be offered a terrible interest rate, which might not make the loan worth taking out over the long-term.
Even way before you consider taking out a loan, and as a general rule of thumb, make sure you’re always paying your repayments on all credit in time and looking after your credit responsibly. This way, you can ensure your credit score is good, and you can achieve the best and fairest rates.
#6 – Shop Around
Every single bank or small business loan provider that you visit is going to be different and unique, and they’ll approach the subject in their own way. While one bank might want nothing to do with you, another might love to have you on-board with their specially designed small business loans. If your local bank turns you down, your next steps should be to look for a local SBA lender here or find a local CDFI here.
“In short, it pays to shop around to see what’s out there and to find the best deal you possibly can. If you go with the bank or provider you apply with first, you can’t guarantee you’re getting the best deal”, – says John Rager, a Business Consultant at WriteMyAustralia.
While there’s a lot to think about when it comes to applying for a small business loan, it’s not impossible to find the best deal for your business. Make sure you’re thinking about it from all angles and approaching the application positively for the best results.