3 Mistakes To Avoid When Applying For A Business Loan

30% of small enterprises fail due to lack of money. This is a frightening figure for a novice entrepreneur. If you want to make big investments to grow your business in the long run, it can be difficult to find these funds.

1) Overreporting Income And Minimizing Expenses

When filling out a loan application, you should give potential lenders an idea of ​​how your business is financed. This includes cash inflows and outflows. However, many small businesses distort these numbers in their applications. While you may think that overestimating your income and minimizing your spending will make your business more profitable, it usually works against you.

2) Apply For Wrong Credit Product

There are many different types of loans for small and medium-sized businesses - they are easy to mix. However, when you apply for a loan, it is very important that you apply for the right loan.

“Every business loan is for a different purpose, said Priyanka Prakash, a credit specialist at Fundera. Make sure you know why you're lending money and apply for a loan product that will help you meet your business goals. ”

3) Misunderstanding Of Creditor Qualification Requirements

Prakash also says that many small and medium-sized businesses have entered the process without fully understanding the requirements of their loan types.

Most lenders publish the basic qualification requirements on their website, says Prakasha. Before applying, make sure you meet the minimum required credit score, working time and other requirements of the lender. ”This will not only increase your chances of approval, but will also prevent unnecessary credit checks by unsuitable lenders. for.