Entrepreneurs who have gone out on a limb to try to start up their own new business know that it can be exciting and be energizing trying to carve out a niche for a successful business in a competitive market. One of the most nerve-wracking and frustrating moments in the entrepreneurial process, however, is sitting down with the loan manager at your local bank to try to convince the bank that your business proposal is legitimate, potentially profitable, and bound for success.

While some reports show that approval ratings for small business loans are actually increasing, big banks still only approve roughly one out of every four loan requests while smaller banks approval ratings hover around 50%. Learning how to get financed with a business loan is a first step that every entrepreneur should intensively research before ever setting foot into a bank. Below, we look at the top three ways you can increase the likelihood of obtaining approval for your small business loan.

Show a Steady Cash Flow

Cash is king in the world of business, and if you are asking for a loan for a business that has already been established, one of the best ways to convince the bank that your business is healthy and legit is through showing evidence of a steady cash flow. Make sure you present all relevant documentation, including tax returns, bank statements, financial audits, and other accounting paperwork that demonstrates the financial stability of your company. While this might not work for genuine startups seeking capital to get their business off the ground, even businesses that have been operating successfully for only a few months might be able to get financing to expand and grow their business if they can show positive cash flow through the beginning of their operations.

Improve Your Credit Score

No matter how good you think your business idea is, the first thing that most banks will ask for is your credit score. Even if you think you have a business plan that is bound for success, it will be close to impossible to get financing if your credit score is below 680. Before you start filling out loan applications, make an effort to pay off your credit cards and other outstanding debts. It might also help to organize your accounting records so that you can show the banks that you are financially organized and able to manage money efficiently and responsibly.

Show Your Understanding of Risk

One of the main reasons that banks do not approve loans to small businesses is because of the perceived level of risk that the business might default on the loan. While small businesses are the backbone of the economy, the Small Business Association reports that around 30% of small businesses fail in the first year while close to half eventually close during the first five years. When you show up for your interview with the bank, do not try to pretend that your business proposal is free from any risk of failure. Rather, show the bank that you understand the potential risks, have studied the potentials for failure, and have used your understanding of these risk factors to create a holistic business plan.