You could be killing your chances of getting a business loan

Posted by Saloni Nair on May 28th, 2019

At some point, you might need a quick inoculation of capital for your business to keep moving forward. You can always opt to avail an instant business loan online when you run short of finances which can improve business productivity as you can then concentrate on growing your business. But with so many potential options out there, requesting an online business loan can seem like a daunting task.

Common mistakes made during your business loan application could affect how long a lender makes you wait before your business loan is approved. These mistakes are avoidable, so make sure you’re prepared before getting a business loan. So what should you do to increase your chances of getting a business loan? It’s pretty easy. Avoid the following mistakes!

1.     Having a low deposit volume

Making two or three deposits per month will tell lenders that you don’t have much business activity, making you a high-risk borrower. At least, you should make multiple deposits per week, make consistent deposit amounts and make branch or ATM deposits. So if you’re thinking of getting a business loan, keep in mind to increase the frequency of your business bank account deposits in order to boost your business loan application.

2.     Incurring non-sufficient funds or negative balances

Lenders also want to make sure that you are not in the red. In other words, they want to see that you are in credit at the end of the month. So as long as you don’t incur multiple non-sufficient funds and don’t carry a negative balance in your business checking account consistently, you possibly will be ok. When getting a business loan, remember to keep non-sufficient fund overdrafts to a minimum of less than three per month, limit the number of days your balance is negative, and develop a plan to cover any predictable overdrafts in the future.

3.     Lacking a business plan

If you want to be taken seriously, you should have a business plan in place before getting a business loan. All lenders require that you have an organized and well-written business plan before they move forward with the business loan process. If you have a well enough business plan, it proves that you have thought through all the details and lenders could be more probable to approve you for a business loan.

4.     Forgetting to check your credit

It’s a good idea to check your credit before getting a business loan. The most important thing here is making sure all of the information is accurate. If it’s not, then you should correct it before getting the business loan. If your credit score is high, then lenders will be more in the cards to approve you for a business loan. Lenders will be most probably unwilling to give out business loans to people with low credit scores.

Conclusion

At the end of the day, you have more control over getting a business loan than you might think. By self-evaluating your business ahead of time, you’ll have half the work done before even applying for a business loan. This speeds up the process and increases the probability of getting a business loan with favourable terms.