10 Expert Tips to Make the Business Loan Process Smoother

Karen Bonner, Jess Hilbert and Shannon Oliver, co-founders of Red Duck Foods
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10 Expert Tips to Make the Business Loan Process Smoother

Getting a small business loan can be an important step towards growing your small business. Unfortunately for many small business owners, the business loan process can eventually become a roadblock to success.

According to a Small business credit survey 2015 by the Federal Reserve, only 50% of grant applicants are approved for the full amount for which they applied. This means that half of small business owners are not getting the funding they need to grow or maintain their business.

These numbers may sound bleak, but if you’re a small business owner in need of a business loan, don’t lose hope. Incomplete application and lack of preparation are two of the main reasons for loan application rejection. But there are simple steps you can take to prepare for the business loan process and make it go more smoothly.

Follow these expert tips to get the most out of your small business loan application.

What you need to know about business loans

  • The type of loan you need: There are many loan options available to small business owners today. More options are always a good thing when looking for business funding, but it can be difficult to figure out which loan is right for you. Fortunately, there are sources like This simple puzzle to point you in the right direction.
  • What will you use the loan for?: the lender will want to know your specific plan for making your new funds. Whether you’re hiring more staff, expanding to a different location, getting new equipment, or buy inventory, you should know exactly what the amount will gain.
  • How much capital do you need?: Just as it is important not to ask for too little, it is also important not to ask for too much. Lenders expect a return on their (you) investment, and if your requested loan amount falls too far at either end of the range, your application will be considered underprepared or innocence. You can, on your own or with an accountant, forecast your sales and profits quarterly to predict how much money you’ll need and when.
  • You have the ability to repay the loan: both you and your lender should be confident that you can realistically repay your loan. If you can demonstrate this in your application, you will have a much better chance of getting approved for your desired loan. Because you know how much you’re asking for and what you’re using the money for, you’ll be able to forecast your return on investment and predict when you’ll be able to repay your loan.
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    Things to prepare in advance

    The biggest key to a smooth and successful business loan process is to prepare detailed information about your business. The list of required documents a business loan application is a long one and not every document is required for every type of loan, but we will do our best to summarize it here:

    1. Legal proof of business

    Business license: your basic business registration or other industry-specific license.

    Proof of ownership: if your business has multiple owners, you’ll need your partner’s written permission to apply for a loan.

    Business plan: not always required, but will help demonstrate your seriousness about the business and get the loan.

    2. Proof of customer base

    List of customers: proof of customer including name, contact information and billed amount.

    Accounts Receivable Age Report: demonstrate your business’s cash flow and show how quickly customers pay you.

    Credit card processing report: for retail, this is solid proof of your sales volume.

    3. Financial proof

    Business tax return: A business tax return of 2-3 years will show your long-term revenue history.

    Profit and loss statement: 2-year report to show your business’s revenue and expenses.

    Corporate Banking Report: at least 4 months and 12 months if your business is seasonal.

    Sales forecast: if your business is too new for tax returns and statements, provide researched sales forecasts.

    Things to double check before you continue

  • Your business credit score: business owners understand their business credit score is 41% chance of being approved for a loan. Be sure to know and understand yours.
  • Your online presence: a lot of Small business lenders are currently reviewing applicants’ social media accounts and online presence. Be sure to double-check your professionalism.
  • Good print: before you take out any business loan, be sure to double check the fine print so you know any hidden costs, such as subscription fees.
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    Get approved for the best loan you can get

    If getting approved for a small business loan is an obstacle, the real challenge is preparing for the leap. Luckily, if you follow these expert tips, you’ll be putting your A-game in the business loan application process.

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