There comes a time in the history of most small businesses where they need an influx of capital. Whether you are facing a slow period, want to expand or need to stock up on supplies at a low price, there may come a time when you want a small business loan. When this time comes, you need to make sure that your business is primed and ready to get the loan you need. To that end, here is a look at five tips for making your small business a great loan candidate.
1. Watch Your Debt
One of the most important things that lenders will look at when deciding whether or not to approve your company’s loan application is your debt. While having debt will not necessarily make your application look bad, it is important that this debt not be too large. Equally important is the kind of debt you have. High-interest debt like credit card balances can reflect poorly on your credit. Make an attempt to keep your high-interest debt to a minimum if you are looking to apply for a loan.
2. Don’t Fudge on Your Taxes
In a bid to try to lower taxes, some small business owners will under-report their revenues and over-report their expenses. While it may save them money on their taxes, companies that do this will be in a pickle when it comes time to apply for loans. When a lender looks over your company’s loan application, you do not want to have your revenue and expense reporting cause your application to be denied. Always fill out your taxes accurately to ensure that you will have the right income-expense ratio to get your loan application approved.
3. Keep Your Paperwork in Order
No matter how successful your small business is, you will be unable to get a loan if your paperwork is not in order. You need someone who takes care of your finances in an orderly manner. Whether this is someone on your staff or an outside CPA, you need to have someone who can keep your books in a neat and orderly fashion. When your books look good and they are clearly understood, it will make it much more likely that your loan application will be approved by the lender.
4. Make Sure You Are Breaking Even
One of the biggest mistakes that small business owners make is to start expanding too soon. If you expand your company too early, it can cause you to have more monthly expenses going out than revenue coming in. This kind of imbalance is precisely the kind of thing that will get a small business loan application denied. You do not have to be turning a massive profit, but lenders at least want to see that your business is breaking even before they trust you with their money.
5. Demonstrate Clear Business Objectives
When lenders give a company money, they want to be sure the company is going to use it wisely. If not, they will have no assurance that they will get their money back. To make your company a strong loan candidate, make draw up a business objective plan that will show lenders exactly how the money will benefit your company.
If you want to get a small business loan, following these five tips will maximize your chances of success. To get a loan for your business, look to help from Advance Funds Network. They are experts at helping small business owners get the loans they need. You can count on getting the influx of capital you need to help your small business when you turn to Advance Funds Network.