Need A Small Business Loan? Here Are 4 Things to ConsiderDaniel Bailey
You have a small business, and you need a loan. Great! What are your options, and how can you go about getting the funds you need, particularly if you have not-the-very-best credit? The answers to these questions may be more favorable than you might think. There are options for small business financing which can help you to achieve financial sustainability and growth. Today we’ll look at some important questions to ask yourself in order to make the whole process of getting financing an easier and more productive one. Step 1): What is the Loan For? The very first step in getting a small business loan is to figure out what, exactly, you need the loan for. It’s important to answer this question for yourself first, so that you can answer it for your potential lenders and investors later. You’re going to want a thorough, well-thought-out business plan of some kind that shows what you are going to do with the money. This will be something you can point to in order to show your lenders that you have something very specific and concrete in mind, and can connect it to revenue-generating activities. There are four key reasons behind most requests for business financing:
Your reasons will naturally shape the kind of loan you’ll want to go after, and that brings us to our second step. Step 2): What Type of Loan? The reasons you are seeking financing will inevitably impact the types of loans you will be able to go after. If you are starting up, you will want to think about a startup business loan, which will be different from the types of loans that you will be eligible for when you can demonstrate revenue sufficient to repay the loan. If you have a year or more of revenue-generating operations, you will be eligible for more types of loans, including business lines of credit, term loans, and Small Business Administration (SBA) loans. In essence, the different types of loans come down to three main categories:
Step 3): What Are the Requirements? The type of loan you select will determine what the requirements are likely to be. Let’s break this down by category:
Step 4): Get Ready for Your Application You’re going to need your documents to be in order before you make the plunge, so be sure you have relevant financials, tax returns, and anything else you need on hand. It may go without saying, but it’s in your interest to review your credit history and make sure everything is in order. If something seems out of place or wrong, remember that credit agencies are not infallible: take the time to investigate and see if there has been a mistake. You should also be advised that a bank or other potential lender is likely to do a so-called hard pull of your credit history, which will have the effect of knocking a few points off. This is not likely to be a big deal if you do it the one time, but too many lenders doing hard pulls on your credit at the same time could be an issue, so only apply to one at a time. Once you have everything in order, you’re ready to apply and to make your presentation. Good luck! |
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