Ways to Make Your Startup Stand Out to Lenders

By Fernando Berrocal

Searching for a small business loan can feel kind of like going out on a date. "Will the lenders like me?" you will wonder as you study lenders. "Will they accept me, or will they reject me?" There are several crucial actions small business owners and entrepreneurs may take to help make their business attractive to lenders so they can't help but want to lend money.

Stand Out to Lenders

Be Active on the Internet:

Some underwriters may conduct a short search of your organization's website. While this should come as no surprise, your business does require a website. Even if it's only a landing page that highlights your products and services and explains how potential buyers may contact you (well-written and nicely presented, of course). No, an Instagram account isn't the same thing as a website. Next, replace your outlook email address with one that is branded with your organization's domain name. A generic email address screams, "I'm not serious about my business," like nothing else.

Make yourself accessible and reachable:

Always return phone calls and emails immediately so that you may supply any additional information required by the lender for your application to be approved. Make sure you have a phone number for your business. You may get a number that adds a distinctive ring and professional voicemail to your current cell phone using a service like Sideline or Google Voice, so you know to answer the phone with a professional approach.

Show the money to the lenders:

Lenders aren't impressed by great business concepts; they're impressed by impressive numbers. You won't have much in the way of revenue when you first start, but that doesn't mean you shouldn't consider it. Create a business bank account and, if possible, put some money in it that you won't touch. As soon as your business starts to generate revenue, make sure to deposit it into your business's bank account. Even if you use payment processors like Paypal, you can enhance your balance by transferring those payments to your business bank account.

Online lenders frequently conduct background checks on your bank accounts; you link your bank account with them, and they examine account activity to determine how much they will lend. You'll need to be able to answer queries about your finances if you have a face-to-face meeting with a banker or investor. If you don't feel comfortable discussing your organization's finances, get assistance from your accountant or enroll in a small business financials program offered by your local Small Business Development Center or SCORE chapter. It's worth remembering that many lenders will turn you down if you use your bank account for business.

Show Off your Credit:

Yes, you have the right to brag about your excellent credit ratings. Lenders are more willing to lend money to your business if you have good business and personal credit. They know that if you've been kind to other lenders by paying on time, you'll be good to them. Some lenders will check a business owner's credit, while others will check both. Some lenders don't check credit at all; nevertheless, the vast majority do, even if it's merely to avoid customers who are currently in bankruptcy. Work on improving your credit if it isn't something you're proud of.

Ways to make Business Stand Out to Lenders

Begin by concentrating on your credit. Examine your credit ratings to learn how lenders may interpret the data. Then, by doing business with organizations that will record your payment history to commercial credit agencies like Equifax, you may start building business credit.

Be aware of your Status as a New Business:

Businesses that provide business loans and finance like to work with profitable businesses. Many people favor businesses that have been around for at least two years. They tend to avoid organizations in high-risk areas and like to make sure that the business is profitable and pays its obligations on time.  At the same time, this does not rule out the possibility of a business receiving funding. Startups can be financed by some lenders. There are even bank loans available to startup enterprises, including SBA-guaranteed loans. Keep in mind, however, that credit standards for a loan to a new business may be greater.

Be Transparent:

Don't try to hide anything dangerous on your business profile that might show up in underwriting. Lenders dislike surprises, so if they find out at the last minute that you have unreported debt or are concealing a business partner with terrible credit or criminal history, for example, you're likely to be dropped. Check your personal and business credit with numerous sources in advance to avoid surprises, such as Dun & Bradstreet and Experian, so you can confidently address anything that may turn up, such as Uniform Commercial Code (UCC) filings or tax liens.

Always strive to improve:

Many new businesses thrive in some of these areas while falling short in others. That doesn't rule out the possibility of obtaining funding for your business. There are numerous financing alternatives available, and you only need to choose the best one for the time being to obtain the funds you require. Continue to improve those weak areas, and you'll discover that as your organization expands, more lenders will become interested.

Ready to bring your startup to the next level? Apply to MassLight’s next batch. MassLight supplies capital and a dedicated tech team. We take equity in return. Have questions? Refer to our FAQ page.

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