Before the blow of the Great Recession, it was much easier to obtain business loans. You must meet certain requirements before the lender can grant you the loan. Here are 7 steps you can take when applying for business loans. Keep reading.

Develop a relationship with the lender

Before you even need the loan, you may want to get into a relationship with the lender. The main people should get acquainted with your business. Keep in mind that lenders like to do business with trustworthy people. So, let them know as much as possible about your business.

Purpose of money

You may want to decide the purpose for which you applied for the loan. Make sure you get a loan with a good purpose. For example, you can get a loan to buy equipment, property, or software. However, it is not a good idea to take out a loan to finance losses or to obtain minor business assets.

Business needs

You may want to evaluate how much money your business needs. If you have a small business, you may not want to apply for a large loan. However, make sure you don’t underestimate the money you need to keep your business running. Both underestimation and overestimation can cause problems down the road.

Credit score

Lenders generally consider an entrepreneur’s personal credit before granting the loan. Therefore, make sure you have a good credit rating. If you get a bad grade, make sure you work on it so it’s in good shape.

Find the lender

You may want to read about the type of lender that is best for your business needs. For conventional loans, you can go to commercial banks. However, its parameters are strict. Non-bank lenders are another option you can consider. Then there are the region-specific lenders that include banks and other institutes that are interested in economic development in those areas. Lastly, you can check out crowdfunding websites, especially if your capital needs don’t exceed $ 10,000. For personals, you can also check out peer-to-peer websites like The Lending Club and Prosper.

Loan application package

You may want to have your loan application package ready. This includes the documents submitted to apply for a business loan. It typically includes a business plan, profit and loss statements, balance sheets, and cash flow statements, just to name a few. You may want to note that lenders can also check your social media pages while doing their research.

Hold on

Once you have submitted the required documents, you may need to wait 15-30 days for a response from the lender. You can register weekly to get an update. Generally, lenders may require additional documents before granting the loan.

So if you have been thinking about applying for a business loan, we suggest that you follow the steps explained in this article.