Applying for a business loan requires a diligent approach, since some mistakes can slow down or halt the application process.
Fortunately, many of those mistakes are avoidable. Watch out for these common pitfalls to make the application process smoother and less stressful.
Having No Business Plan
Before applying for a business loan, you must have a clear idea of how you’re going to use the funds. State your plan in concise and compelling terms, and then put it in writing. If you don’t feel confident enough to write the plan yourself, seek assistance from a professional writer or a friend.
Not Reading the Loan Terms
Even though we all know that you’re supposed to always read the fine print of any contract, many applicants overlook this step. Read the terms carefully and make as many questions as you deem necessary. Doing so will give you peace of mind and allow you to stave off future headaches.
Not Checking Your Credit Score
Always check your credit score before applying for a loan. You can get a free copy of your credit score from some of the major credit bureaus. Look for discrepancies and make sure to correct any inaccuracies. These are some of the problems that users encounter most often:
- Errors in identity data
- Accounts that belong to another person
- Same debt listed more than once
- Accounts with incorrect balance/limit
- Accounts that appear multiple times
Failing to Complete the Application Package
Again, reading carefully and being able to follow up go a long way toward getting your loan approved. Read carefully the application package provided by your lender. Get all the documents, and then double-check or triple-check every item if necessary.
As you can see, many of the factors that impact the application process of a business loan are within your control. With patience and some work, you can stack the odds in your favor.