Applying for a working capital loan doesn’t have to be a stressful situation. Even if you’re a small or mid-size company, you can easily position yourself to submit a compelling application. Follow these five simple steps the next time you apply for a working capital loan.
1. Design a Plan For Your Loan Funds
Lenders like to see that you have a plan for the funds you’re requesting. Whether you need a short-term solution for paying your bills, extra capital to grow your business, or cash to upgrade your equipment, you need both a plan and a dollar amount. Take the time to calculate your needs; after all, it not only helps your loan application but also your own business strategy.
2. Demonstrate Demand for the Entire Life of the Loan
This step is especially helpful for longer-term loans. Use your loan application to showcase your industry’s projected growth throughout the repayment period. Alternatively, a seasonal business seeking a short-term loan can provide information on income projections during upcoming busy periods. Any of these data points show a lender that your business has the ability to repay the loan from beginning to end.
3. Organize Your Documentation
Getting your documentation organized ahead of time not only helps your lender get the necessary information, but it can also help you get cash into your account much faster. In fact, in many cases, CMS Funding can fund a loan in under 24 hours. Before you apply, gather your most recent business plan, tax returns, and financial statements. The most up-to-date and accurate information can really get the loan process moving quickly, while simultaneously reflecting well on your company.
4. Prepare Your Business and Personal Credit
When you know you have an upcoming loan request, it’s particularly important to start focusing on both your business credit and your personal credit. Be extra diligent with making payments on time, whether it’s for a vendor or a personal credit card. Even if you have challenged credit, recent positive financial behavior can strengthen your working loan application.
5. Select a Working Capital Loan That's Right For Your Business
Different kinds of businesses need a variety of financing options to choose from. Don’t just assume that all working capital loans are exactly the same. Improve your chances for approval by applying for a loan that’s specifically suited to your needs, whether it’s a seasonal plan, a deferred payment loan, or a simple advance.
By following each of these points, you’ll not only strengthen your loan application but also create a stronger business model to continue your company’s growth well into the future.