Sorry to Hurt Your Feelings: What Business Lenders Really Care About

Getting a business loan is an important step for many small business owners who need capital to fund their growth and operations. However, obtaining financing can be a challenging and frustrating process. In this video, "SORRY TO HURT YOUR FEELINGS," the speaker explains that lenders only care about two things when it comes to approving a loan: the borrower's ability to execute their business plan and their financial projections. In this blog post, we will dive deeper into these two key factors and provide some tips to help increase your chances of getting approved for a business loan.

Ability to Execute Your Business Plan

One of the main things that lenders care about when evaluating a loan application is whether the borrower has the ability to execute their business plan. This means that the lender wants to see that the borrower has a clear understanding of how they will use the loan funds to grow their business and generate revenue. The borrower should be able to provide a detailed plan of action, including timelines, milestones, and key performance indicators (KPIs) that they will use to measure their success.

To increase your chances of getting approved, it's important to have a well-thought-out business plan that demonstrates your ability to execute. This plan should include a detailed overview of your business, including its history, mission, and values. It should also outline your target market, competition, and growth potential. Finally, it should include financial projections, such as revenue and cash flow forecasts, that demonstrate how you plan to use the loan funds to grow your business.

Financial Projections

The other key factor that lenders care about when evaluating a loan application is your financial projections. This means that the lender wants to see that you have a realistic plan for generating revenue and repaying the loan. Your financial projections should include a detailed budget that outlines all of your expected expenses, such as rent, utilities, salaries, and marketing costs. It should also include revenue forecasts based on your sales projections.

To increase your chances of getting approved, it's important to have realistic financial projections that are based on market research and historical data. You should also be prepared to provide detailed documentation to support your projections, such as sales reports, balance sheets, and profit and loss statements. By demonstrating a solid understanding of your finances and how you plan to use the loan funds, you can increase your chances of getting approved for a business loan.

Tips for Getting Approved

In addition to having a solid business plan and financial projections, there are several other things that you can do to increase your chances of getting approved for a business loan. Here are a few tips:

1. Check your credit score: Your credit score is an important factor that lenders consider when evaluating your loan application. Before you apply, make sure that your credit score is in good shape.

2. Be prepared: Before you apply for a loan, make sure that you have all of the necessary documentation and information that the lender requires. This may include tax returns, financial statements, and business plans.

3. Shop around: Don't settle for the first lender that you come across. Shop around and compare rates and terms from different lenders to find the best deal.

4. Build relationships: Building relationships with lenders and investors can be a great way to increase your chances of getting approved for a loan. Attend networking events and connect with lenders on social media to build these relationships.

Conclusion:

Getting approved for a business loan can be a challenging and frustrating process, but by understanding what lenders are looking for and taking steps to improve your chances of approval, you can increase your chances of success. Remember to have a solid business plan, realistic financial projections, and to be prepared with all of the necessary documentation and information. By following these tips and building relationships with lenders, you can achieve your goals and take your business to the next level.