Acquiring a small business loan is challenging, but it doesn’t have to be a complete nightmare. By coming into the application process prepared, you can easily get the capital you need to bring your business to another level. If you are interested in small business lending, be sure to use the tips here to secure the funds you need.
Keep All Documents Organized and in Order
Transparency regarding the financial state of a business is crucial. Your application for a small business loan will go much more smoothly if you keep your tax, accounting, and financial records updated and accurate. Be sure your business has a system to use that keeps this information organized. It may even be a good idea to hire an accountant to help with this.
Keep a Good Credit Score
While keeping up with your documents is a must, you also need to pay your bills on time. Any lender providing small business lending is going to require you to meet some level of credit criteria. As a result, it’s necessary for you to have the best credit score possible. This means avoiding late payments, charge-offs, bankruptcies, and foreclosures.
You should also avoid applying for more than one loan at a time. Sometimes, a lender is going to want to see your credit report, and this may impact your score. If you try to apply for too many loans at once, it could kill your chances of getting the financing you need.
Know What Type of Loan is Needed
You need to figure out the type of loan that will work best for you and your business. If you apply for an SBA loan when all you really need is a line of credit, this may slow down the entire process and may even result in a denial.
A common myth people believe about small business lending is that it’s difficult to get approved, it costs a lot to acquire financing and that it takes much too long to get it done. The truth is, though, this all depends on what program you are applying for. For example, if you are interested in an SBA loan it can take up to 90 days to get an answer. However, if you apply for a merchant cash advance or a line of credit, the requirements are usually less stringent, which makes it easier and faster to acquire.
If you need funding for your small business, keep the information here in mind. This will help you get the funds you need when you need them.