How to improve your chances of getting a business loan

Getting a business loan can be extremely stressful and frustrating. There are long applications that require an abundance of information and after all those efforts, you can still get rejected. It’s a hard pill to swallow. It can happen to you and even to established companies.

So how can you increase your chances of getting a business loan?

First, the stats

58% of businesses unable to borrow money at big banks, essentially freezing their dreams and goals. According to recent data from Lending Express, out of 58% of businesses that cannot qualify at a bank, there are still 14% of ‘deserving’ businesses that are just inches away from being able to qualify for a business loan.

You may be thinking, what about alternative lending? It’s a great option for many people. However, it’s always good to know your options and understand them before making a decision.

Here we’ll show you what you can do to increase your business loan rate as well as how to reduce your ‘risk’.

1. Clear your credit score

No way: business and personal credit scores matter. Credit score is a factor that comes up again and again, and for good reason. Your credit score is the most influential factor when it comes to getting approved for a business loan from most sources. If your business is young, it won’t have the opportunity to establish a business credit score, which means lenders will likely keep an eye on your personal credit score.

Your ability to pay on time is what will attract or deflect lenders, so make sure to set up automatic payments so you never miss out again. If you can do so financially, get current information and try to pay off any existing loans so you can improve your utilization rate (the ratio between the amount you owe and the credit lines for your various credit cards and lines of credit).

Building a good credit score takes dedication and patience. If you don’t have the time to build an excellent credit score, know that there are alternatives—even for those with lower scores (more on that later).

2. Start mixing that credit — but no too a lot of

Another area of ​​credit score that you should monitor is your credit mix. Having experience with different types of credit really counts as good that in the eyes of the lender – it shows you have more experience in arranging different types of financing.

However, make sure you don’t open an account just for the sake of it, which can have a big impact in the long run. You need to make sure you only open them when you need them instead of, for example, taking out an installment loan that you can’t afford just for the sake of mixing.

3. Build a healthy business

Getting your business to not only stand, but function is a challenge every business has to face.

Next to your credit score, it’s your business’s total monthly sales and overall ‘health’ that lenders want to see. They will be interested in whether your business is capable of generating not only a small amount of money, but a solid revenue with steady cash flow. The more steady your cash flow is, the less risky it is for the lender.

To keep your gross monthly revenue good and high, you need to master the art of stopping your money from draining and finding ways to increase your revenue. Whether it’s through growing your customer base, incentivizing returning users, or even increasing your prices (don’t overdo it, you have to find that hottie), there are hundreds of ways to do it. do this!

Now, if only there was a hospital for businesses, where you could walk, check in, and then leave all the prep work behind. Well, this doesn’t quite exist yet but there is a next best option and many things you can do to help make your business healthier…

Lending Express features a new dashboard ‘Lending Score™’ where businesses are deeply analyzed through AI and machine learning, then a personalized funding profile is allocated. Each business is guided with insights and step-by-step actions on how to boost their score (based on how their business looks to lenders) and ultimately find their way. shortest way to capital. Meanwhile, the business will be shown what loans it might be eligible for (if any), and presented on how to improve “finance capacity” and unlock better funding opportunities.

4. Get a Time Machine

The longer your business has been open, the more data there is to analyze. Most lenders want to see at least six months’ worth of data (sometimes even two years), although the most recent three months for your business are the most important. For those just starting out, the entrepreneurial age is, unfortunately, something that few have control over and perhaps a time machine will be the ultimate solution to this problem.

If you can’t take the leap into the future, don’t worry. Young businesses may have fewer options but still have funding alternatives. Many young companies turn to friends and family, crowdfunding, and start-up loan to get through the early stages.

5. Choose the right lender and product

There are hundreds of different funding and lending products on the market for small and medium businesses, and just looking at them all is enough to make anyone dizzy. This is where matching technology fits into the market. You can sift through all the different lending institutions and products yourself under the sun, find out who you may or may not be eligible for (sign up and potentially go through multiple times). credit check in the process) or you can use a platform that does some of the work for you.

One such platform is Lending Express. With one app, Lending Express uses AI technology to match SMEs looking for funding, with one of more than 30 partners (including Fundbox). You’ll then be able to see which lending partners and their products you might be eligible to use, saving you time and reducing the need for too many tough credit pulls.

With so many financial products available, it’s an option well worth considering when making your choice.

This post was written by Annabelle Amery of Lending Express for Fundbox. Using AI, Lending Express matches SMBs with personalized funding solutions.