5 Things That Look Bad in a Business Loan Application

5 Things That Look Bad in a Business Loan Application

One of the qualities of being an entrepreneur is having the possibility of generating your financial independence in a shorter period of time, hand in hand with a fulfilling life. Achieving this goal is not an easy task, especially when facing the first obstacle: obtaining financing.

There are several alternatives for raising capital. In the best cases, they will come from the entrepreneur's savings, external investment, or family and friends’ loans that, in most cases, do not charge interest and make the first months or years of the business easier. But what about businesses that cannot access any of these resources?

The option is to seek financing from financial institutions, the idea is simple, but in practice, the process is more complicated than it seems. Here are 5 things that look bad in a business loan application, are you ready to put your best face forward to lenders to get the best small business loans? After reading this text, you definitely will be.

Avoid making the following mistakes

Financing for companies is a commercial relationship that must be treated with order, discipline, and compliance in time and form of the established agreements. These characteristics will generate a good credit history so that in the future better small business loans will be approved for your company's growth projects.

  • No bank accounts or credit history: Entrepreneurs who have not had access to personal credit products before applying for business financing are less eligible for institutions. If you want to get business credit cards or small business loans, it will be easier if you have a financial background.
  • Not having a business plan: Before applying for financing, it is necessary to prepare a business plan that serves as a guide to establish business lines, operating models and financial objectives. By having a document of this type, financial institutions will be able to better analyze the future of your company and at the same time the real payment capacity you will have. 
  • Not knowing your credit score: If you have accessed financial products before, you already have a credit history. If you had no difficulty making payments, you will have an excellent score. But if, on the other hand, you were late or did not pay, we recommend you check your credit score at annualcreditreport.com before applying for financing.

    The intention is that you are aware of your situation beforehand to know if you are really eligible for financial institutions. 
  • Do not investigate: Before applying for financing, it is necessary to investigate the different characteristics of each loan and the requirements of each institution, we recommend you to know the options offered by companies such as Camino Financial. This way you will arrive prepared, with the proper documentation and with a better chance of obtaining capital.
  • Applying to several institutions simultaneously: You might think that if you apply to different financial institutions, you would be more likely to get financing, but this idea is far from reality. Financial institutions verify your credit history on each application and each verification lowers your score, doing this process with several lenders will lower your credit score by at least 20 points.

The most important thing when applying for any financing such as small business loans is to analyze if they fit your needs. The worst mistake you can make is to get a financial product that is not right for you, each type of loan or credit is developed to meet specific needs.

Don't let your dream disappear or never see the daylight for lack of capital. Entrepreneurship will be the most incredible professional adventure of your life, it will require a lot of effort and hard work, but the rewards are priceless. Give yourself the opportunity to succeed doing what you love.

Learn about small business loans from companies like Camino Financial, which have minimum requirements and will provide you with the necessary support to solve all your doubts. Please describe to us the company of your dreams and what is missing to make it a reality?