A flawless credit application is a must for small and large company owners alike.
A successful loan application will show that your business is capable of repaying any loans it takes out.
Furthermore, a successful application will also confirm that your business as a relatively low credit risk for lenders.
So how do you make sure that your application is successful?
The key is to make it stand out from other applications.
Follow these five tips to make sure your credit application is at its best before you submit to lenders.
1. Be conscious of your own personal credit score.
If you own the business, it’s important to make sure you have a reputable credit score of your own. Lenders will carefully evaluate your personal score before deciding to approve your business credit application.
If you want to check your score or obtain a free copy of your credit report, visit AnnualCreditReport.com. This site is operated by the federal credit bureau, so there are no fees or strings attached.
If you find any errors, ensure you’ve corrected them before submitting your application.
2. Be conscious of your business credit score.
Lenders will evaluate your business credit score and reports, if there are any, to determine whether or not they should approve your application.
You can request your business credit score and reports from Experian Business, Equifax Small Business, or Dun & Bradstreet. The lender will analyze these reports to determine whether or not your application is successful.
Additionally, these reports will help the bank establish the terms and conditions for your business’ line of credit if your request is approved.
If you don’t have any business credit established, the lender can only use your personal credit report to process the application. What you’ll want to do in this case is to obtain your D-U-N-S Number from Dun & Bradstreet before you apply. This will establish your company’s profile on Dun & Bradstreet, which lenders can access to process your application.
3. Include strong references.
Good trade references will assure the lender that your business is in sound financial health and is, therefore, a low credit risk. You’ll need three to four trade references for your application to be considered for approval.
If any of your references don’t report their payment history to a business credit reporting agency, ensure that you supply any additional information needed to process the application. Be sure to provide contact information for all of your references, including the company name, address, and phone number on your request.
4. Include your company’s financial information.
You may need to provide evidence of your business’s cash flow and expenditures in your application. This will let the lender know that you make enough capital to pay back a line of credit.
Lenders may ask for any of the following statements, among others:
- Profit & Loss Statements
- Cash Flow Statements
- Bank account statements
- Proof of assets
- Proof of investments
5. Provide a business plan. You’ll want to prove to lenders that you have a clear plan in place to grow your business and increase profits. It doesn’t have to be long or complicated, but you’ll want to make sure that it’s thorough yet concise.
A business plan might include:
- A summary of what your company does
- The primary goals of your company
- A list of the products or services your business provides
- The market for your products or services
- Customer demographic data
- Potential competitors
- Financial reports
For more information on building a solid business plan, click here.
It’s as simple as five steps.
But if you’re still anxious, here are a few final tips to keep in mind before you submit that application:
- Review your application carefully. Make sure there are no errors or typos, and that you’re giving the lender as much detail as possible.
- Always be professional. Even if you follow these tips, there’s a chance a creditor could request additional information. In this case, always reply promptly and in a professional manner.
- Don’t get discouraged if your application is rejected. Instead, view the rejection as a learning opportunity. Ask the lender why they chose to reject your application – this will help you make improvements for next time.
Applying for credit can be stressful for anyone, whether it’s an individual or business.
However, don’t let the stress intimidate you.
As long as you stay proactive and organized, your business credit application can pass with flying colors.