Q:

What are tips for applying for a first-time business loan?

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When applying for a first-time business loan, it is important to have a credit score of at least 720 and an established credit history, according to Forbes. Free credit reports are available annually from the main three credit reporting bureaus.

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What are tips for applying for a first-time business loan?
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Full Answer

New business owners are more likely to get a loan with ideal terms if there is more money coming into the business than there is going out, notes Forbes. Instead of getting a short-term loan, getting a long-term loan may be more beneficial because it allows for more breathing room. Paying low monthly payments can help a business to secure a better loan later, and it can help to prevent financial crises in the future.

New businesses are more likely to get a loan if they offer some sort of collateral, states Forbes. This makes the first-time applicant more appealing because there is a recourse option if the borrow defaults on the loan. The cash value of a life insurance policy, expensive equipment or publishing rights are all examples of collateral.

If possible, try to become familiar with potential lenders before the loan is necessary, recommends Forbes. If a lender already knows and trusts an applicant, the chances of an approval are far greater. It is important to decide on an accurate amount of money to request, as asking for too much can turn lenders away, but asking for too little can hurt the business.

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