Getting approved for a business loan doesn’t have to be complicated. Just follow this simple checklist.
These steps will boost your credibility and go a long way to improve your chances of getting the financing you need.
Prepare a comprehensive business plan
You want to show your project is well-researched and low risk—using statistics and data from multiple sources to back your business plan.
Prepare financial projections
Your business plan should include financial projections for the next two years. These projections are forecasts of your cash inflows and outlays, total income and balance sheet.
Identify your investment and collateral
Bankers want to see you’re making a financial contribution to show your commitment and reduce the bank’s risk. It’s also important to show that you have the capacity to reinvest in the future if necessary.
Check your credit history
Bankers consider how you’ve handled your debt in the past to be a clear indication of how you’ll handle it in the future. You’ll look a lot more credible if your discussions with bankers reflect what’s recorded on your credit history.
Set clear objectives
Have a clear idea of what you want and what you’re willing to accept. Consider the amount of money you need, the interest rate you’re expecting, the repayment schedule you’re looking for and the date at which you need the funds.
Various banks offer different loan products. Key differences are often buried in the fine print, so it’s worth looking at all your options before making a decision.
- Be honest and transparent: Ultimately, the best way to gain the trust of your banker is to be transparent about your business goals, the potential pitfalls you’ve identified and the solutions you’re thinking about to overcome these challenges.
- Contact organizations like Futurpreneur Canada and local development agencies who will look at your business plan and tell you how it can be improved.