Many people who wish to start their own business or to expand their existing one need an injection of financial capital at the beginning of a business; as we all know, the main source of funding for entrepreneurs is business loans.There are few common mistakes we make while applying for a business loan or during the processing of the loan which can result in a rejected loan application Business loans in Texas. I will try to present a few of them which will help you understand the what you need to ensure that your next business loan application will not be rejected or why your previous loan application was rejected.
Before applying for a business you need to do some homework and make certain plans about how you are going to approach your lender and how you can ensure that your loan application won’t be rejected.Do some homework — First of all you will have to decide the type of loan you need then do a good research on the lending market and find out which lenders are best suited for you. List them in the order of interest in the market in which you are in. It will help you determine who is most interested in your business and is willing to help you succeed. After you identify the right lender or bank, make it sure that the lender understands your business and what you’re aiming for.
Once the planning part is completed the next step involved is collecting or organizing the required documents. This step also needs to be done with a cool headed approach so that you can make sure all the necessary documents are ready.
Keep this on mind that all statements in the application will need to have supporting documents so make sure to gather them all.
The following are some of the documents which you will find necessary.
A consumer credit report is a factual record of an individual’s credit payment history. Its main purpose is to help a lender quickly and objectively decide whether to grant you credit. If your report shows a mistake, contact the credit reporting agency and demand a correction. An explanation letter should be included with your loan application if your credit report shows legitimate late payments or bankruptcies, this can reduce the negative impact of these black marks on you during the processing of your loan application.
In addition to standard loan documents, a lender expects to see a written proposal when someone applies for a business loan. This is your chance to highlight the most exciting and promising aspects of your business and to prove to your lender that you’re a prime candidate for a loan. The proposal must include a description of your business, the amount of funds requested, it should also include why you are seeking for the funds and the amount that you will contribute. The proposal should tell how you are going to repay the funds. This is what supposed to serve as a basis for your loan application.
It is important to be presented with your tax returns and other financial papers from the preceding two years – for both yourself and your business, so make sure you have them all ready before going ahead.The next step in the process is preparing the application. It should me made sure that no mistakes are there in this vital step. Some of the common mistakes are.Incomplete Application, Inaccurate Statements, Incomplete Financial Disclosure, Unsigned and Undated Application, Illegible Writing, Handwritten loan documents and Lack of supporting documentation for the statements in the application.