Have you watched the movie Pirates of Silicon Valley or read about the story of its main characters? It’s based on a true story that gives viewers a peek of how Steve Jobs and Bill Gates started out with their businesses. In the movie, there’s a scene where despite the exciting product Jobs has, banks still found a way to reject his application for a loan. It did not give the reason, but there’s a strong chance that the rejection has something to do with how he presented himself and his business to the loan officer.
So how do you actually convince the bank?
The Past is Important
Suppose you’re a loan officer and here comes somebody you don’t know from Adam apply for a business loan without credit history or business plan, would you grant him a $20,000 loan? Fact is, you will be wary of approving his application even if the requested amount goes down to about $1,000. Credit history is very important with a business bank in Minnesota.
According to Forbes, banks attach a great deal of importance to credit history and score. Before you apply, secure your credit report and check its accuracy. If you find anything questionable, immediately file a dispute before it reaches the bank.
What’s Your Plan?
How you intend to pay for the business loan is also a question that you should expect the loan officer to ask you. A good business plan presentation can greatly help you in this case. Prepare a comprehensive business plan, complete with financial projections and make sure to support those projections with raw data. A business plan outlining your goals, projected income, and marketing strategies to achieve financial objectives, is very important when applying for a bank loan. Banks would definitely want to be partners in your business success but they also have to be convinced that your business plan is doable and its projections are achievable.
Obviously, this applies to everything and more when applying for a bank loan. While nothing can stop you from making false declarations such as how big your business is earning at the moment, it might provide a path to your downfall sooner or later. Providing the bank accurate information regarding the real financial state of your business, how much loan it needs to achieve its long-term business plans, and the time your business needs in order to repay the loan is the proper way to do it which could help you secure the loan.
Applying for a business loan involves careful preparation. It’s easy to say your business needs $20,000 which it can pay within the year because you expect your business to earn 1 million dollars during that time, right? How you get from this phase to that point is, however, the question that should be answered to guarantee the approval of your business loan.