As with anything in life, a loan application has many opportunities for you to make a mistake. However, too many mistakes on a business loan application will get it sent straight to this discard pile. Here are some of the top mistakes you could make on your application.
You Don’t Say What the Loan is For
The biggest mistake you could ever make when you apply for business loan is to not even specify what a loan is for. This will look highly suspicious to the lender and is more than enough grounds to deny your application. You need to be able to lay down an airtight business plan which details exactly when and where the money is going to be spent. Show the lender exactly how you intend to use it and you are one step closer to making it yours.
You Don’t Provide Financial Records
Another massive red flag is when you provide incomplete financial records or you don’t offer them in the first place. It suggests to a lender that you have something to hide and makes them suspicious about the information you are withholding. You should always provide complete and recent financial records when applying for a business loan. If you have something concerning in your financial history, just make sure you are able to explain it and account for why it should not happen again.
You Have a Poor Credit Rating
This might also apply to you as the business owner in addition to the credit score of the actual company. The lender will want to know that you as a managing director are able to handle the sheer amount of money which comes with a business loan. The best way to do that is for them to take a look at your personal credit rating; if you feel like that might impact negatively on your application, spend some time improving your credit score so you look like a good candidate.
You Have Applied for the First Loan You See
Many businesses take out loans in emergencies, meaning that they often fail to do some of the crucial groundwork you need to do when making a loan application. Even if you are applying for an emergency loan, spend some time – an hour, an afternoon, whatever you can spare – going through your options to find the right type of loan for your circumstances. This could be all the difference between you finding exactly the loan you need and one which you could pay off easily, as opposed to one which you are committing to without properly knowing what you are about to get yourself into.
Applying for a loan should never be rushed. Make sure that you are always fully aware of what you are applying for and don’t be afraid to ask someone to take the time to look over your application to verify that everything looks good. The more time you put into your loan application, the more confident you can be when turning it over to your potential lender. The money you need is just one step away.
