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Big banks have only a 27.7% approval rate regarding loans, with credit unions having 39.9% and small banks having 50.1%. This may be concerning if you’re a business owner needing a loan. The process can also be time-consuming, as you have to deal with long wait times. This could have massive implications for your business, especially if you have limited time. Thankfully, there are ways to increase your chances of getting the needed funding, including the following.
- Have a solid business plan
A lender wants to be convinced that you have a plan for the funds and a realistic strategy for repaying the loan. So, create a solid business plan demonstrating that you are a responsible borrower. Doing this will increase your chances of getting approved quickly. Your business plan should include detailed financial projections, short-term and long-term goals, a detailed marketing strategy, your staff strength, other business resources you already have, a description of your target audience, and your business competition.
- Be clear on what you want to do with the money
As part of your business plan, you should detail the purpose of the loan, ensuring that you’re as transparent as possible. And although various reasons will validate your need for a loan, lenders tend to prioritize businesses that add to the long-term value of their companies. Another reason to clarify the purpose of the loan is that your lender may offer better suggestions or strategies to help you make the right decisions.
- Prepare all required documents in advance
One thing that can slow down your loan approval process is incomplete or missing documentation. A lender may typically require several documents before you can qualify for a business loan. These may include requested financial statements and your tax returns, among others. So be sure you have all your documents in place. Regarding tax, for example, you need to have your EIN or federal tax ID number to speed up the process.
You can find out the cost of applying for a federal tax ID number if you don’t have one and initiate the process of acquiring it. You need to gather all the relevant documents well in advance before you submit your loan application. Also, double-check to ensure that every information is accurate and up-to-date, and be ready to provide any additional document if your lender requests it.
- Apply for a paperless loan
With the help of online loan aggregators, you can get your loan approved t through a paperless loan application process. Such loans have a quicker turnaround time without the stress of printing countless documents, so feel free to consider this. With most paperless loan applications, your credit card company or bank may pre-approve a loan based on your profile, making the loan available with minimal documentation.
Seeking a business loan can benefit your business, although the process may be lengthy. Fortunately, the right tips can help you boost your chances of securing one. Hopefully, you’ll consider those listed above for the desired outcome.
