Try to build a relationship with potential lenders before asking for a loan, recommends Forbes. Lenders are much more likely to give funding to a company they know and trust. Before requesting financing, make sure the reason for the loan is appropriate. Examples of bad reasons to ask for financing include acquisition of new business assets that aren't necessary and compensation for ongoing losses.Continue Reading
Figure out exactly how much money is necessary, and request that amount, states Forbes. Asking for too little is a common mistake among small businesses. Asking for too much can sour a potential lender's view of the company, but not requesting enough money can lead to problems for the company.
If necessary, take steps to improve a low credit score, recommends Forbes. Between 700 and 800 is what lenders typically seek. Lenders may also consider personal debts, which should not be more than 33 percent of the company's gross monthly income.
When asking for money, it is important to have a thorough budget that includes financial projections to give it credibility, notes Forbes. Prepare all paperwork in advance, including resumes from all business owners, a balance sheet, and cash flow and profit and loss statements. Include at least three years worth of tax returns and any other relevant personal financial information.Learn more about Credit & Lending