Nearly every small business needs a loan at some point. Yet getting a small business loan is easier said then done. In this excellent article in the Business News Daily, Paula Fernandes describes six common barriers to getting a small business loan and how to overcome them.
1. Poor Credit History – entrepreneurs with poor credit history should consider alternative channels that primarily look at the strength of the business in making loans.
2. Limited Cash Flow – be prepared to show that you can comfortably pay back the loan with you cash flow.
3. Lacking a plan for the future – be prepared with a business plan including how you are going to use the borrowed funds.
4. Disorganization – having your act together before applying for a loan can go a long with lenders. SBA provides a checklist for borrowers.
5. Failing to seek expert advice – lenders want to see that you have sought guidance from knowledgeable advisers who complement your skills. E.g. if finance is not your strong suite then do you have someone on your team or an adviser guiding you on finance?
6. Apathy – lenders want to feel why you are the best candidate for the loan. They want to see your passion for the business.
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