Financing is often a necessary step for small businesses, especially those with low working capital or companies that are seeking to expand. There is a wide variety of business loans available to small businesses for a myriad of applications, but securing a loan with the best rates and terms can be tricky. Here are 3 ways you can put yourself and your business in a good position to receive the best deal for a loan.

1. Boost Your Credit Scores

The first thing lenders look at is your business credit score, which is a risk assessment based on your business’ financial health. Higher credit scores coorelate to higher interest rates and fees. In many cases, such as with SBA loans, your personal credit score may also be a factor. If you want to put yourself in the best position, do what you can to boost your credit scores. Increase your amount of available credit, check your credit history for anything that shouldn’t be there, and pay your monthly payments in a timely manner.

2. Sign with Collateral

Collateral is what lenders will use to mitigate risk. The best sort of collateral is cash, and if you can afford to put down a large payment, your terms and rates will shift in your favor. Otherwise, another asset could be considered. For example, if you’re applying for an equipment loan, the equipment itself can be used as collateral. This way, should you default on your loan, the lender can repossess the equipment and use its liquidation value to cover the cost. The more valuable your collateral is, or the easier it is to convert it into cash, the more manageable your terms will be.

3. Focus Your Business Plan

Unfortunately, your business type can’t be helped. Some businesses are inherently riskier than others, and if you’re in an industry that isn’t considered lucrative, you’ll be subject to higher rates. However, what you can do to help your case is show your business plan. A good business plan will have a detailed history of your business, its role in the market, and how it solves a problem in the industry. If you want lenders to see you as favorable, make sure you emphasize how promising your business is and how this loan will help you work towards your goal, including any statistics or financial projections.

Business loans are often vital for a small business, so it’s important to put your best foot forward when applying. Take these three things into consideration and you’ll be well on your way.