There are a number of things you can do to improve your chances of securing a loan. Here are five of the most important:
1. 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.
2. Invest your own money. Lenders typically like to see that owners have at least a 25 percent equity stake in the businesses they finance.
3. Rent, don’t buy. Lenders prefer that you invest in assets that generate income, like inventory and equipment. Bankers also frown on high renovation costs.
4. 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 beforehand what they’ll find.
5. 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.