Thinking of starting your own business? Here are our recommendations for making that dream a reality with a small business loan.
Few things are as gratifying, (or challenging) as leaving the relative safety of working for someone else to start your own small business. After all, every decision you make, from who you hire, to where you’re located, has the potential to make or break your business. It’s a nerve wracking endeavor that not everyone is cut out for, but for those who have the drive and do their homework, it can be tremendously rewarding. So if you are up to the challenge, the first obstacle you must overcome is financing the start of your business.
Unless you have already accumulated a little nest egg for your small business venture, you will likely need to get a small business loan. This a place where people mess up, either getting more than they need, or failing to get the loan in the first place. So what can you do to increase your chances of being approved for a small business loan? Here are our top tips:
- Think like a lender: Put yourself in the position of your lender who is not completely sold just yet that you will be an overnight success. You must demonstrate that your small business is more likely to succeed than fail, and that this a good opportunity for the lender instead of a risk. Provide an excellent application, and have a thorough understanding of your financial situation, including your options for collateral (e.g. your home), cash flow, and credit status. Also, be sure to dress to impress.
- Calculate your costs: People get in a lot of trouble when they take out loans for more than they need. After all, you will have to pay it back with interest, so it is better to know exactly what you need to start, and maybe save the bells and whistles for a little later when you are making a profit. Plus, not knowing what you need to start your business will underwhelm your lender, making them less likely to approve your loan.
- Make the most of your failures: If you have already been rejected by a lender, take their misgivings and criticisms to heart and learn from your errors. When you approach the next lender, you are more likely to get approved.
- Choose a Small Business Administration lender: SBA backed lenders like First Reliance Bank can provide SBA loans that offer lower interest rates, and attractive repayment terms compared to alternatives.
- Be a wise consumer: Be sure you understand you loan, such as the annual percentage rate (APR) and other fees, rather than just blindly signing on the dotted line. Otherwise, you may get more than you thought you were bargaining for.
- Be wary of internet lenders: While online lenders may have more relaxed requirements and can often approve you quickly, the tradeoff is high interest, oppressive terms, and a lack of transparency.
- Local banks like small business: Local banks like First Reliance enjoy working with local entrepreneurs to achieve their goals as opposed to many of our nationwide competitors that prefer equally large clients.
If you follow these seven tips, you are significantly more likely to be successful in your efforts to get a small business loan. Are ready to take the next step towards realizing your dream? Contact the banking professionals at First Reliance Bank to discuss your options for a small business loan today.