CREDIT 

Making sure that you are current with your credit cards, auto loans and any other type of debt is particularly important. Lenders make their judgments primarily based on your credit score. If you have defaulted on any of your credit, you will probably be denied. Taking a proactive approach and being current on your payments will benefit your position of getting a small business loan. 

Obviously, debt isn’t a difficult position to get into because people always live above their means. Keeping your credit cards balances paid in full each month would be the optimal circumstance. Unfortunately, real life doesn’t always grant us the financial freedom we need. However, we still need to make the minimum payments due on each credit source to be in good standing with your lenders.

 
BUSINESS PLAN

When going to your lender, you should already have a business plan in place with financial figures as to the initial start-up costs associated with your intended venture. Costs of equipment, rent, human resources, etc. all have to be projected as accurately as possible in order for the lender to grant you a loan. These forms of assessments should be professionally compiled using computer printouts. 

Your lender will want to be sure you can handle their monthly payments on their loan; so having accurate cash flow projections of your revenue will assist in that aspect. The type of business is an important aspect as well. Many entrepreneurial businesses are based on providing services that have relatively low overhead, which will increase your cash flow and give lenders confidence in loaning you money. Additional questions the lender may ask include: 

1. 1. Is your business seasonal or cyclical?
2. 2. How great are your risks?
3. 3. In what state of development is your business?
4. 4. How strong is your management team? 

ADDITIONAL DOCUMENTS

Your lender will probably require 2-3 years of tax documents to verify your financial position. Whether or not you have been in business for yourself before, they will want to see your tax returns from prior years, as well as bank statements.  Bring copies of your college degree or certificates in education that show knowledge or expertise in your intended business.  

References, newspaper clippings, anything that proves your capability, backs up your character, along with your stability can be helpful.  Think about putting together a power point presentation and emailing it prior to your meeting; generally you won’t have more than an hour total to state your case and review documents.

TAKE A LEAP OF FAITH

If you don’t try, you won’t succeed.  Times are tough and it’s not a surprise to anyone that you may have had some troubles in the past, even a bankruptcy several years back.  If you have 3-5 years of at least paying your bills on a timely basis, and you go into the meeting armed with the above documents, projections and references, and an attitude of confidence and determination – you will have a very good chance of getting a loan, or at least getting some realistic options.  If you’re told that you need another 6 months of history or should revise your business plan, don’t give up—remember 80% of success is showing up.

Tony Patterson is a personal finance consultant, and content contributor for companies offering consumers a credit card for bad credit situations they may have temporarily experienced.