Whether you are a first-time business owner, or have an established company, odds are you will need to apply for a loan more than once over the course of business. While people sometimes think of loans as burdensome, that’s not necessarily the case. A well-priced loan can allow you, as a business owner, to accomplish something you might otherwise be unable to. The steady process of repayment also helps build credit and establish a sturdy fiscal profile. If you are looking into taking out a loan, consider the three tips below to promote success in the process.

1. Write a Clear Business Plan

Any lender will want to be sure that their investment has a strong chance of being fully repaid. An important ingredient in this process is the creation of a business plan. Whether applying for a first-time business loan or one to expand a business, a comprehensive plan will help to demonstrate that you are prepared for the obligations of borrowing, and able to repay the loan. 

There is no single way to write a plan, but typically it will include thorough financial records, as well as detailed financial projections, to demonstrate the long-term viability of your business. A plan should be able to answer any questions you may have about the business, as well as those of any lender.

2. Build Good Credit

It’s almost universally true that you’re more likely to secure a favorable business loan with a high credit score. For a variety of reasons, you may simply have low credit — maybe you took out student loans in the past, or had a financial hiccup from which you’re still recovering. Fortunately, credit can be improved in a number of ways. One of the simplest ways is to take out a small loan — for instance, a credit card or business line of credit — and use it for regular but small purchases that can be quickly repaid. Ultimately, the process of steady repayment will help improve your credit, and make securing a substantial loan more feasible.

3. Compare Options

Luckily, there are many options for borrowing, from banks to credit unions to private investors. Do a thorough survey of options you might have, broadly exploring rates, fees, repayment terms, and other details. A comprehensive understanding of lending options will help ensure you apply for the most suitable loan for your business.

Borrowing money is often a necessity for new and established businesses. Consider the tips above as you seek to find a lending option that makes sense for you.