Tips for Getting a Small Business Loan in Detroit

Detroit offers a wealth of opportunities. Few areas of the country have as much to offer as the Detroit Region. Packed with more engineers and manufacturing know-how and infrastructure than anywhere else in the world, Detroit’s successes drive economies in every state in the nation.

This is a place where innovation thrives. This is the home of energetic entrepreneurs and a workforce recognized around the world for its skills, expertise and productivity. 

Did you know?

  • Nearly 1,300 companies from 38 countries employ more than 150,000 people in the Detroit region.
  • Since 2006, the city of Detroit has experienced more than $12 billion in new investments across 150 projects.*
  • 63 of the top 100 automotive suppliers to North America are headquartered in Michigan.
  • Automakers and suppliers have invested over $17 billion in Michigan since 2010, and $1.7 billion in 2014 alone.
  • Detroit and Port Huron make up the busiest North American border crossing, facilitating more than $200 billion in trade annually.
  • Detroit Metro Airport offers access to the world, with 270 international flights weekly to more than 25 destinations on four continents.
  • Flat 6% Corporate Income Tax is among the lowest in the nation.
  • Top 15 corporate tax rate in the nation. (Tax Foundation)
  • Michigan became the 24th right-to-work state in the U.S. on December 2012.
  • With 45 projects, the Detroit region leads the nation in connected vehicle technology.

* These numbers reflect projects that received $5 million or more in investment.

This is a Region where Things Get Done.

The old saying rings true: sometimes you have to spend money to make money. When it comes to small businesses and entrepreneurial endeavors, however, that working capital can be hard to find. The process is especially intimidating when you realize just how much banks have retreated from small business lending in the aftermath of the 2008 recession. In fact, traditional banks have denied around 80% of requested small business loans since the recession. Although applying for small business financing is still daunting in a world ruled by traditional banks, it is possible to obtain the loan you need. Use these tips to help secure your small business loan:

Outline Your Business Plan

A thorough and well-organized business plan can do more than help you organize and grow your business. As you apply for a loan, including a clear business plan will give lenders an introduction to your industry, niche market, mission statement, and company goals. The document should also outline your goals for growth, including how additional funding would fuel that growth. By providing every aspect of your business intentions in detail, lenders can better evaluate your chances for success. A lending agency will be more likely to grant your full loan request if they feel your company is on track and will be able to repay the loan in full.

Determine Loan Amount and Use

In general, most lenders want to facilitate small business funding and growth. A lender is likely to say “no,” however, if they cannot clearly see how the amount and proposed use of the loan make sense for your business. Are you interested in short term loans and equipment loans, or do you need additional funding for working capital? Once you define the projected use, determine the amount you will need while factoring in repayment time and cumulative interest.

Next, organize and update your accounting records to ensure they include all aspects of your business’s financial health. Lending agencies will take a close look at your current finances and base their decision on both your current cash flow (to make payments) and your projected post-loan revenue (to pay off the loan entirely).

Review Your Credit Report

Despite the many different factors that lenders evaluate, your personal credit score is still a huge determiner in whether or not you will be declared eligible for a loan. Small business owners should examine their credit reports about twice a year for inaccuracies or mistakes, as these can quickly drive down your credit score. It is possible to correct errors by contacting your reporting agency, but be aware the correction process is long and complex. If you plan to apply for funding within the next year, examine your report now to ensure everything is correct.

Otherwise, you can self-evaluate your own eligibility if you keep track of your score and know it is accurate, whether low or high. A score of 700 or above is considered excellent, and most lenders will approve any scores above 620, giving you plenty of lending options. Scores between 520 and 620, or below 500, are often a caution sign for lenders in determining eligibility.

Still, many alternative funding firms understand how small business credit scores are easily affected by the combination of large operating costs and late-paying customers. Look for a small business funding source like LVRG that looks beyond your credit score to determine loan eligibility.

Avoid “One Size Fits All” Loans

Traditional approaches to financing often leave small businesses owners and entrepreneurs behind. Small business funding is unique because every company operates differently, with individual daily operations and financial plans. Because of this, traditional bank financing might not be the answer. Consider using an experienced funding firm, such as LVRG, where the mission is to build client partnerships in order to understand and assist small business owners with their unique financial needs.

A business loan, whether for a few thousand dollars or a few million, can make previously unavailable opportunities obtainable, providing a customized solution in a time of need and keeping the lights on even when the going gets rough. With ready access to business capital, the possibilities are literally limitless, offering the assets you need to promote a positive trajectory and inspire healthy growth.

Headquartered in Detroit's Historic Ford Building, we are a local funding firm dedicated to helping the local business community thrive and grow. With a dedication to our clientele and a reputation for excellence, you'll understand why LVRG is such a respected member of Detroit's small business community. Give us a call today (855) 998-5874, we're here to help!

Reference: http://www.detroitchamber.com/start-here/why-the-detroit-region/