By Mike Bryant
Looking to increase your chances of a positive outcome from a business loan application? Before walking to a bank on the other side of town or going to an online lender, every small business owner should complete these four steps:
One: Separate personal and business bank accounts
Lenders want to know about your revenues and need documentation to prove it. This is commonly fulfilled by a business owner supplying checking account statements. If your statements include both recent supply orders and tickets to the next Taylor Swift concert, the task of underwriting will be both tedious and time consuming. Having to go line by line to pick out which purchases were business related and which were personal is a waste of everyone’s time. The easiest thing to do is separate expenses from day one, using different accounts. Tracking revenues and costs will be easier for you, and it will make tax season a breeze.
Two: Create an online presence
When lenders look at a company, online presence is very important. A company with more likes on Facebook, followers on Twitter, or higher ratings on Yelp not only shows a healthy business, but also represents a reduced likelihood of fraud. A lower risk of fraud can translate into a lower interest rate for the borrower. Even if you operate a single dump truck, investing time into creating an online presence is almost always a good thing.
Three: Start searching early
The worst time to apply for a loan is when you really need it. Start your search early enough so you have time to discover what’s out there. As you look into options, you should be aware that lenders look at the number of inquiries on your credit report when deciding whether or not to lend to you. Try to minimize your inquiries to three or less over a six month period.
Four: Keep your information up-to-date
Running a business means having to balance priorities. Keeping your information up-to-date at your Secretary of State’s office, paying your state registration fees and filing your taxes in a timely fashion should be at the top of your to-do list when you’re looking for funding. Staying on top of details like these will minimize the back and forth between you and your lender, saving you time and money.
Mike Bryant is the Director of Borrower Relations at StreetShares.
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