There are a number of things you can do to improve your chances of securing a bank loan. Here are five of the most important:
- Have a sound business plan. It’s especially important to polish your executive summary. This one- to three-page summary of your business is what bankers look at first — if they like what they see, they might read on.
- Invest your own money. Lenders typically like to see that owners have at least a 25 percent equity stake in the businesses they finance.
- Rent, don’t buy. Bankers also favor businesses that plan to rent rather than purchase a building.
- Check out your credit report. Lenders use your personal credit history to help them decide whether you’re a good risk for a loan, so it pays to know what they’ll find.
- Explore local banks. Smaller community banks might be more inclined to finance businesses in their areas, and their loan officers are more likely to give you individual attention.