How to Get Approved For a Business Loan
One of the first questions on the mind of any entrepreneur is how they will finance their business. That's because the old adage is often true: You have to have money to make money.
But just presenting a big idea isn't enough for a bank to give you a loan to bring your vision to life. While an SBA loan is one of the ways to fund a small business, your banker will want to make sure you're a solid risk, regardless of your business's size.1
Here are four elements bank will consider before making a loan — and how you can maximize your chances of getting a “yes."
1. A solid business plan
While established businesses have a lengthy track record to bolster their application, a newer business should strive to prove their credibility by showing they've done their homework with a substantial business plan. It should include such elements as:
- Company overview: Convey who and what you are doing that's different to give your banker a sense of your story.
- Executive biographies: Confirm your expertise by sharing your team's background.
- Market data: Show your business' viability with research and analysis that pinpoints your target market.
- Sales projections: Explain your pricing structure and when you hope to turn a profit.
- Summary of plans: Articulate what you'll be doing with the funds — whether it's to expand your team, acquire new technology, or ramp up production..
Put your best foot forward: Run your business plan by your mentor or another small business advisor to make sure it provides a holistic picture. You might only have one opportunity to present your story so you want to make sure it shines.
Did you know? Banks will assess your business credit score as part of their loan decision.
2. Financial paperwork
There's no way around it: to apply for a bank loan, you'll have to provide a lot of financial information. Get started by assembling:
- Business and personal bank statements
- Income and loss statements (if you are an existing business)
- Tax information
- A copy of your business license
- Articles of incorporation
- Lease documents, if applicable.
Put your best foot forward: Double-check that you have everything you need to make a strong initial impression. The Small Business Association has a handy checklist here.2
3. Strong business credit score
You're probably already familiar with the importance of a strong personal credit score in order to obtain the most favorable interest rates when you get a credit card, mortgage, or auto loan. And just as your personal credit score provides a snapshot of your personal financial health, a business credit score presents a picture of your company's trustworthiness. Banks will assess your business credit score as part of their loan decision — and also if you're in the market for a credit card or other banking products for your business.
Put your best foot forward: Build a healthy business credit score by prioritizing good credit habits, like paying bills on time and minimizing debt. You also might consider getting a business credit card to further boost your credit mix; just make sure you always pay it off fully to avoid interest charges.
4. A relationship with your local banker
Don't worry: This isn't a case where you have to “know" someone to get the money you need. But it can't hurt to develop a rapport with one of your bank's local relationship managers. They are there to act as a resource to small businesses. If they truly understand your goals, your product or service, and your business model, they can most effectively advocate for you.
Put your best foot forward: Remember that your banker is your ally. If you're open about your situation, they can suggest the banking products and services that you will be most likely to qualify for and that can best help you achieve success.
Ready to receive that coveted “Loan Approved" stamp and move your business to the next level? Contact Synovus today (we're an SBA Preferred Lender) to find out how one of our bankers can help you secure the funding you need today for your business success tomorrow.
Important Disclosure Information
This content is general in nature and does not constitute legal, tax, accounting, financial or investment advice. You are encouraged to consult with competent legal, tax, accounting, financial or investment professionals based on your specific circumstances. We do not make any warranties as to accuracy or completeness of this information, do not endorse any third-party companies, products, or services described here, and take no liability for your use of this information.
SBA Preferred Lender
As an SBA Preferred Lender, Synovus can provide faster answers for quicker results.