How to Make Your Business More Attractive to Lenders
With approval rates for small businesses trying to get a loan being pretty low (one in four people can get a loan from one of the big banks), it’s times like these that small businesses should be doing their best to maximize their chances of getting the funding they need. With everything from efficiency, improving business credit score, managing cash flows, and even using specialized tools to seek out the best loans available to them (more on that later) will all be helpful.
1. Learn How to Increase Profitability
Easier said than done, isn’t that what you’ve been trying to do all this time?
This may seem a little contradictory but, by reducing your costs you could actually increase your chance of getting ahold of extra financing. If you show that you’re able to maximize cash flow, it demonstrates an eye for financial control that’s sure to be more attractive to investors.
Here we cover just the tip of the iceberg and given you a few things to think about when it comes to ways to increase business profitability.
Ways to increase profitability:
- Cut waste – be it travel expenses, power costs (is everything switched off when not in use) or via suppliers (are you getting the best deal possible?).
- Premises – are there more efficient ways to manage your space? Perhaps sublet space that’s unused, maybe even allow for freelancers to work at an empty computer?
- Production – make the process more streamlined, examine if there are ways to cut waste or use fewer working hours.
- Lay off admin workers during downturns who aren’t directly involved in production/sales.
- Up-selling – could you make more profits from your customers? Maybe even diversify your products?
2. Credit Repair: How to Remove Defaults and Black Marks from Your Credit Report
Bad credit is one of the leading factors that lenders take into account when deciding whether or not to provide funds for a business. What you require in order to get approved for a business loan is to remove defaults from credit report records and any black marks that plant the seeds of doubt in a lender’s mind.
For those who are unfamiliar with the term, ‘black marks’ are those that refer to information on your credit report which indicate red flags such as missed payments, defaults, charge-offs, collections, judgments etc.
First things first: when you need to remove defaults from credit report, you need to check if the black marks and, more importantly, the defaults are legitimate. Order a copy of your credit report from one of the credit reporting bureaus and make sure everything is accurate. If you find something inaccurate be sure to report it by filing a dispute with the credit reporting agency.
If existing credit accounts are your main problem:
Be sure to contact your credit provider and make sure your negotiation skills are in tip-top shape. Now’s the time to negotiate a repayment plan that’s more manageable for you to reduce the number of missed payments and prevent from future defaults.
For further credit repair, there are credit repair agencies that can help you clean up your credit record and further prevent those black marks.
3. Know the Difference Between Personal and Business Credit
Credit repair is, of course, one of the largest factors that need to be taken into account when it comes to doing what you need to get a business loan and make your business more attractive to lenders. If you don’t already know the difference between personal and business credit, you should! If you don’t, don’t get yourself down about it, studies show that around 45% of entrepreneurs are clueless on the matter.
Be sure to check your business credit score with one of the three credit bureaus so that you can better understand your business track record. Be sure to work just as hard on credit repair for your business credit as you do your personal credit record.
4. How to Save Time Loan Searching
Once you’ve built up a decent credit profile and worked on your business track record, you’re going to want to find the best lenders and deals out there. It can be extremely time-consuming sifting through the interweb to find what you’re looking for, and even if you do find something, you may or may not qualify! You don’t want to be applying for many different funding solutions, as any hard credit check completed by a potential lender can lower your credit score (temporarily).
The solution, you ask? Harness the power of technology to help find funding. Save time, money and resources by applying through Become. Our marketplace has many lending partners with many loan products on offer. By filling out one form (that will not affect your credit score), Become’s AI technology will use your information to cross check it with all of our lending partners and their loan options, to see which one is best for you, saving you a LOT of time and hassle. Better yet, there are options for alternative funding solutions for those that have a less than stellar credit record, as much of the process will judge the health of your business and not solely your credit score.
Click: Become to check to see if you qualify now.
You never know, there may be an option with your current score as is – even if you have a less than stellar record!
And there you have it! There are always steps that you can take to increase your score, and you never know, you may even be able to get funding solutions now, in your current situation.