5 personality traits the best business loan applicants have in common

Secure a small business loan for your business can be the difference between failing or thriving.

Whether you are running a new, growing business or a strong business in your community, a business loan can provide you with the capital you need to hire more staff, fund inventory during a particularly good time, allow you to grow. in another location, make payroll if you are having trouble, buy new equipment to upgrade your store, and more.

But, of course, getting approved for business financing isn’t as easy as filing an application, although you probably know it. So who Is be approved, exactly?

In fact, the best borrowers have a lot in common, and you can use their applications to help increase your chances of getting approved for a business loan. Not only will you increase your chances of obtaining the financing you are looking for, but the higher your profile as a candidate, the more likely you will be to obtain favorable loan terms. And this is the better news from all.

What lenders look at when reviewing your loan application

Everything you’re about to read boils down to this commercial lenders are looking for candidates which will help them mitigate risk. After all, the money-lending business is inherently risky, and lenders not only want to make sure they don’t to lose money, but get it back (and then some).

These are the key factors that lenders use to assess the level of risk you present as a borrower. This combination of indicators allows them to assess the likelihood that you will or will not repay the money they lend you:

Solvency

Lenders will assess your credit report — often both your business credit and your personal credit, depending on the loan product you want, to see how you’ve handled the money you’ve borrowed in the past. More often than not, lenders will take your credit score into account when deciding whether or not to offer you a loan. In general, the higher your credit score, the lower your perceived risk.

Cash flow

Lenders will want to make sure you have a solid cash flow to repay your loan and assets you can rely on in the event of a setback. This is one of the reasons they usually ask for bank statements for subscription. For many seasonal businessesProviding proof of constant cash flow can be a challenge: you earn the majority of your money in certain calendar months, and therefore your cash flow is uneven.

Time in business

The more data you can provide to a lender about your history of responsible money management, the better. This is why time spent in business is an important statistic. You have more of a business credit history so the lender can see and judge your risk factor, in addition to proving that you were good with the money loaned.

Returned

Although not all companies are profitable, lenders will look at the income you generate. Sometimes blacking out your business can take a while, and so does the investment. With that in mind, lenders want to see that your business is generating consistent income over an extended period of time.

Plan the use of your loan

Lenders will assess the purpose of the proposed loan as well as your plan for implementing the funds. You’ll want to come to the table with a plan for what you’re going to do with the money, whether it’s investing in fixed assets, inventory, wages, or whatever.

Shared qualities of top business loan seekers

Obviously, the most qualified loan seekers all do a great job of the above on their small business loan applications. But beyond those quantitative factors, here’s what the top candidates have in common:

1. They are responsible.

This one won’t surprise you much: a top-tier business loan seeker is responsible. This goes for the money, the organization, and paperwork (because some business loan applications require a lot of paperwork). Since a lender won’t be able to meet with you, a great way to prove you’re responsible without saying a word is to use your credit score. Since a high credit score is a digital reflection of your financial responsibility, you will be able to show your lender your ability to pay your bills on time and manage your credit successfully.

2. They are precise.

The best business loan applicants prove their skills by asking for the exact amount of financing they need – not too much, not too little. If you throw a high number to see what you can get, you will communicate to the lender that your expectations are unrealistic. Use a business loan calculator to make sure your income can cover the loan you are applying for.

3. They are ready.

All in all, the top loan seekers are prepared. You need lots of information when applying for small business financing, and the best applicants do their research ahead of time. This way, they find out all the documents they are missing, especially for SBA loans, and get them ahead of time to speed up the deadline. Make sure you are prepared and organized with all of your documents and data.

4. They plan ahead.

Successful loan applicants usually don’t wait until they are in crisis to obtain financing for small businesses. And, because they’re planners, they have a detailed plan for implementing their business funds once they get them – a new hire, a new location, a new marketing campaign – and have a good idea of ​​the return they can get from it. Commercial use.

5. They are attentive.

The best loan seekers have kept their bills under control to keep their credit rating high. But they also know that the business loan process doesn’t end when the deal is signed. They understand that they also need to be mindful of their loan bills, and that this can help them get an even better loan for small businesses down the line.

Position yourself as a leading business loan applicant

The best business loan applicants have some basic qualities in common, and knowing them can give you a head start when applying for a small business loan. Whether you’re ready to apply for financing for a small business or just starting from scratch, you can set goals for yourself to get the financing you want and maybe even become a more effective partner. business owner in the process, too.