Whether you’re looking at a traditional bank, or a nonbank lender like OnDeck, applying for a small business loan is all about illustrating your overall risk profile. A lender is looking to determine ways how likely you are to repay your loan – in full and on time. In order to make your application as attractive as possible, it’s best to follow these best tips:
1. Pay your bills on time
This is the most important part of building a strong financial reputation for your business. You have to pay your bills on time. You can even invest in applications, or auto-pay options, that pay your bills automatically to ensure you’re never late.
Look at your “utilization ratio”
How much are you charging on each of your cards, and what is their credit limit? This is something you always have to keep in mind. Many business owners likely aren’t aware of the damage that maxing out their credit cards can do to their credit score (and therefore, to their ability to obtain small business loans). As a general rule, never ring up more than 30% of your limit on any given credit card.
Pay down your debt
Finally, you’ve got to make conscious priorities regarding the debt you’re paying down. Your credit cards, for instance, have a massive effect on both your personal and business credit scores. So, always paying down your credit card debt first – even if it means you need to pay less on something like your student loans during a given month.
DISCLAIMER: This content is for informational purposes only. OnDeck and its affiliates do not provide financial, legal, tax or accounting advice.
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