If you're a business owner, it's likely you'll need financing at some point. Perhaps you need cash to get your business off the ground, or maybe you have plans to expand and need to hire new staff or add new equipment.
There are different ways to obtain that cash, including focusing on grassroots funding or using your own cash to fund your business needs. For many business owners, however, securing a business loan through a bank is the most viable option. But asking the bank for money isn't easy, and about 80 percent of small business loan applications are rejected.
Before stepping foot in a bank, take a look at a few things that can help improve your chances of getting a loan.
1. Boost Your Credit Score
Darin Namken, CEO of CreditSoup, explains that lenders want to feel confident that they can trust borrowers to repay their debts. "The best way to gauge that is by looking at how often you pay your bills on time," Namken says. "Your payment history is easily the most influential part of your credit score, and even one missed or late payment can knock an otherwise stellar score down quite a few pegs."
2. Show Off a Strong Marketing Plan
Every business needs a solid and flexible marketing plan that proves to lenders that you know how you're going to acquire and keep customers. It also shows that you plan to manage your marketing efforts as the daily tasks of running your business increase.
Marketing automation and CRM platforms like Hatchbuck, designed specifically with the small business owner in mind, show that your marketing and lead-capturing efforts are taken care of so you can concentrate on running your business.
Additionally using these platforms and data analytics gives you valuable information on your clients. The more you show an ability to use this information to understand trends and client behavior the more confidence you will give the lender.
3. Be Prepared for Anything
Lenders are impressed when a potential borrower shows knowledge of possible industry pitfalls and realistic financial margins. The restaurant industry, for instance, is renowned for its small margins, seasonal trends, and slow nights.
To prepare for this, many business owners use technology and software such as Upserve to anticipate sales, manage operations, and mitigate risk. Upserve provides real-time insights that enable restaurants to respond and maximize margins, for example, by scheduling less staff or cutting back on prep work.
4. Tell Your Unique Story
Even if you have a solid business plan and the numbers all add up, there still may be something missing: your company's vision.
Sharing your unique story can prove to the bank that it should invest in you (not just your business). If you showcase passion, a history of success, and a bright future supported by numbers that add up, the lender will want to see you succeed and will be more willing to give you the cash you need to make that vision come true.
So when it's time to go to the bank, remember that a good credit score will get your foot in the door, a marketing plan and a strategy to handle risk will impress the lender, and an engaging story will seal the deal.