Owners of small companies are finding it difficult to obtain small business loans these days. Even though the economic climate has improved, banks are not making it easy to for business owners to receive loans. Banks are under new scrutiny with the banking regulations that came about after the financial meltdown in 2008. Along with the effects of the credit crisis, banks are not so forthcoming with loans. There are bright spots in this picture, though, as some banks are willing to lend money to a small business. Here are some ideas to make your company shine in the eyes of the banks in the competition for small business loans.

Your credit worthiness as an individual and as a company is going to count the most in the eyes of the bank. They are going to look closely at your credit score to make their decision, but they will also take into account your track record with other loans you have taken out in the past. The banks will consider your repayment history, your debt to income ration, and other factors that revolve around your financial history. There is no doubt that how creditworthy you appear in the banker’s eyes will go a long way in the decision they make about giving you a loan.

It is a good idea if you draft a loan proposal. This will give you better odds in finding a loan and streamline your explanation of why you need the loan. When drafting the loan proposal, it should contain all the pertinent company information: description, organizational structure, past financial records, and a valid forecast of future earnings as a result off the loan. To be complete, the loan proposal should also present the company’s plan of dealing with lean times. All information in the proposal should be accurate and presented well. It is a good idea to err on the side of caution as banks tend to put aside proposals that are too optimistic.

Do not put all your eggs in one basket and work on getting your proposals out to multiple banks. The approval rate of small business loans is not great, even among banks that are willing to finance a small business. You are increasing the chances of being approved for a loan by getting in front of as many lending institutions as possible. Approach each bank as if it is the only one you are going to go after and put the same amount of effort into each proposal. Your goal is to get a bank to sign off on your loan.

When you run out of traditional lending options, do not be afraid to look at the different unconventional means of financing that are available. These unconventional measures may give an owner some options if their credit score is not so good. They include loans on receivables, credit cards, borrowing against a 401K, etc. Besides being viable methods of obtaining money, they can also be used to improve your credit score. They tend to not be so constrictive in their requirements for issuing a loan or in their repayment terms.
ur credit report be updated as a courtesy.