Acquiring funding is one of the most difficult hurdles a small business will face. Aspiring small business owners are often unaware of not only the availability of small business loans but of how the process for getting one works. Applying for these loans is a complicated and time consuming procedure. However, the small business owner can simplify the process by keeping a few things in mind.
Getting a business loan is as much about finding the right lending institution as it is about having a proper business plan. All banks do not use the same criteria when determining who will get a loan. While some banks may emphasize the business background of the owners, others may put more emphasis on a well-developed plan. Finding the right fit can be a long and discouraging process.
Personal History Matters
Small business owners are often caught off guard when they learn that their personal history may be one of the criteria for getting a loan. The credit history of each owner may be a major factor in determining the success of a loan application. Furthermore, lending institutions may look to the owners to provide personal collateral to help secure the loan.
Receiving a loan rejection is never easy. However, being rejected can provide a unique learning opportunity that a savvy applicant will take advantage of. It is important to remain calm and focused. Have an open and candid conversation with the bank about why the application was rejected. This direct feedback is one of the most effective ways to improve the application and increase the chances for future success.
Even though the government provides many programs and agencies to assist in getting small business loans, understanding and following the procedure can still seem daunting. It is important that the hopeful business owner becomes knowledgeable as early in the process as possible.