You’ve worked hard to build a successful business. And you are seeking the financing you need to make it even better. Now you just have to convince your lender… Negotiating a business loan is like preparing for a test. You’ve got to do your homework to get the best results. Here are some tips to help make the process simple and successful:
1. Make sure your fiscal house is in order.
By nature, a loan is a risk. And a lender is going to look closely at your financial health to evaluate the risk of lending your business money. So take steps to clean up your personal credit score (yes, even though you want business loan), and make sure your business debts and bills are in order to show lenders you are fiscally responsible.
2. Know how much money you are asking for and how it will be used. Being clear about your needs goes a long way toward building lender confidence.
3. Have a business plan. Include a description of your business, products, sales strategy, long-term financial projections, and management team biographies.
4. Don’t stretch the truth. You will be asked some tough questions. Answer them all positively, honestly and directly. The goal is to show character – which is one of the Six C’s of Credit.
5. Negotiate the terms. Think about what you can do to lessen risk for the bank. Offer collateral, if possible.
6. Be patient and confident. Negotiations take time.Give the lender the time to process your information. And know that your business is worth the wait.
7. Get a second opinion. Don’t be upset if you don’t get as much as you hoped for. If you feel you can get a lower interest rate, lower closing cost or different terms on your loan, by all means go get a second opinion. With the right preparation, good personal and business credit, and a solid business plan, you’ll be in the best position to prove your credit worthiness to a business lender who’s ready and willing to help your business grow. For information on Webster’s business loans, click here or ask us any questions in the comments below.