Whether you’re a startup or a small-medium business owner, loans are an essential part of keeping your company running. From investing in projects to buying equipment, a business loan can help cover a wide range of expenses. However, securing a loan isn’t easy, especially if you own a small or new business.
As leading loan providers in NYC, we have discussed some mistakes to avoid when applying for a business loan. Keep reading to find out.
Not Providing an Informative Business Plan
Lenders look at your business plan when deciding whether to trust you with your money or not. Submitting a business plan with inadequate information is one of the many reasons for loan application rejection.
You need to come up with a thorough strategy that clearly states the amount of funding your business needs, how you plan on using these funds, and your repayment plan. You should also provide basic information like earnings, profits, operating costs, and expenses.
Borrowing More than Your Financial Capacity
Before applying for a loan, you should understand your affordability capacity and choose the right amount. Your cash flow is the first thing lenders look at when reviewing an application. If your cash flow is limited, you should decide on a smaller loan amount or optimize your cash flow before applying.
When lenders realize that a business doesn’t have enough earnings to pay back in the given period, they reject the application.
Poor Credit Score
Another important thing that lenders consider is your credit history. Your application might get rejected if you have a history of not paying back your debts diligently. You should improve your personal and business credit scores before applying for a business loan. If you need funds immediately, you can apply for a merchant cash advance loan in New York if your credit score is low or business lines of credit (it helps improve your credit history).
Multiple Loan Applications
If your business loan application is rejected, you should wait at least six months before applying again, or the lenders might not trust you with their money. Similarly, applying for multiple loans at the same time is another red flag for lenders.
At Whitestone Fund, we help business owners with their loan applications and financial issues. You can apply for business loans, merchant cash advances, working capital loans, or business line of credit financing in NYC at our firm, and our loan agents will assist you throughout the process. Reach out to us now for more details.