7 Steps to Get A Business Loan

Before the hard strike of the Great Recession, it was a lot easier to get business loans. You have to meet certain requirements before the lender can grant you the loan. Given below are 7 steps that you may want to follow when apply for business loans. Read on.

Develop a relationship with the lender

Before you even need the loan, you may want to develop a relationship with the lender. The main people should get familiar with your business. Keep in mind that lenders like to do business with trust worthy people. So, let them know as much as possible about your business.

Purpose of the money

You may want to decide on the purpose you applied for the loan for. Make sure you are going to get a loan for a good purpose. For instance, you can get a loan to buy equipment, property or software. However, it’s not a good idea to get a loan to finance losses or to get unimportant business assets.

Business needs

You may want to make an assessment of how much money your business needs. If you have a small business, you may not want to apply for a large loan. However, make sure you don’t underestimate the money you need to keep your business running. Both underestimating and overestimating can cause problems down the road.

Credit score

Typically, lenders consider the personal credit of a businessman before granting the loan. So, make sure you have a good credit rating. If you have a bad rating, make sure you work on it to get it in good standing.

Finding the lender

You may want to read up on the type of lender that will best suit your business needs. For conventional loans, you can go to commercial banks. However, their parameters are strict. Non-bank lenders is another option that you may consider. Then there are region specific lenders that include banks and other institutes that are interested in economic development in those areas. Lastly, you can check out crowdfunding websites especially if your capital needs are not over $10,000. For personals, you can also check out peer-to-peer websites, such as The Lending Club and Prosper.

Loan application package

You may want to get the loan application package ready. This includes the documents submitted so as to apply for a business loan. Generally, it includes a business plan, profit and loss statements, balance sheets, and cash flow statements, just to name a few. You may want to keep in mind that lenders may also check out your social media pages while doing their research.

Hang on

Once you have submitted the required documents, you may have to wait for 15 to 30 days for a response from the lender. You can check in on a weekly basis for an update. Usually, lenders may require additional documents before granting the loan.

So, if you have been thinking of applying for a business loan, we suggest that you follow the steps explained in this article.

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Easiest Business Loan to Get: What Factors Are Important When Looking for a Financing Solution?

Every type of business requires some sort of loan or line of credit for a wide range of reasons: start up capital, equipment, inventory, office rental, etc. Since every business and every owner is different and has unique circumstances, the easiest business loan to get for another owner might not be the easiest for you.

For start-ups or businesses that have either no credit history or a poor credit history, it will likely be difficult to obtain traditional bank loans. Also, with a low credit score, your interest rate will be high, even if you are approved for a loan.

Lenders will usually look at more than your credit history. Other factors include your time in business, industry, your personal credit score, whether you’ve had any recent bankruptcies or defaults, balance sheet, business licenses and permits, tax returns, purpose of loan, proof of collateral, and several other reasons.

If you can think that your financial situation is likely to improve, you’ll need to provide the documentation to prove it. Always have your documents and financial files ready and organized anyway, so that you’ll be able to get through the application process as smoothly as possible.

Are SBA Loans the Easiest Business Loan to Get?

Many people don’t consider SBA Loans and long-term loans to be the easiest business loan to get, as the application process is very long and complex. Only consider SBA loans and long-term traditional business loans if your credit score is high and you have all your financial statements prepared and ready to go. However, the application process still might take some time, so you’ll have to wait on approval.

If you need cash as quickly as possible, there are options such as merchant cash advances. This type of offer will help you access capital. You’ll receive a lump sum of cash, but you’ll be expected to give up a portion of future sales. You will have the responsibility for paying back the loan itself as well as fees. While there is no set fee, $15 for every $100 borrowed seems to be a pretty typical amount by many cash advance merchants.

Invoice financing and equipment financing are pretty similar with their requirements. With the former, you’ll need to show details of your unpaid invoices, as well as bank statements and other financial information. With the latter, you’ll need to explain the type of asset(s) your company needs to purchase, and provide an equipment quote, business tax returns, bank statements, etc.

There are many other options for business of all sizes thanks to the internet. Online lenders are popping up all the time, although it’s best to stick with one that has been around for at least a decade. Begin your search with US Business Funding, an accredited company with the BBB. They will help you find the easiest business loan to get for your needs.

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