How To Apply For A Small Business Loan

Small businesses have to do a lot to compete with larger businesses, and they can use all the help they can get.

There are a lot of different avenues they can take, but one common avenue taken is to apply for a small business loan.

But how exactly do you apply for a small business loan?

Applying For A Small Business Loan

1. Decide the loan purpose and amount

Before you actually make contact with a provider of small business loans, you should make sure you know what you’re asking for.

Getting a small business loan is a nice idea to help get your business on track, but if you don’t have a game plan, you shouldn’t be surprised if you find that your prospective loan provider is not exactly thrilled to work with you.

Essentially, you should go into the application process with knowledge of what the money will be used for, as well as how much money will be needed.

On top of that, you should also demonstrate that your company will be capable of paying off the loan in the long run by showing that your company has a strong cash flow.

2. Pick the ideal small business loan lender

Not all lenders are going to be a good fit for you or your business, so you need to pick one according to your wants and needs. There are multiple kinds of providers that can give you a small business loan, including banks, online providers, and more.

When all is said and done, perhaps the best reason to pick one lender over another is how much interest they are charging you. It’s not the end all be all, but at the same time, a good interest rate is a huge draw.

The only issue is that, unfortunately, the better the interest rate is, the higher the bar you’ll be expected to clear.

You’ll need a combination of at least a couple of years of business experience, a strong credit report, and good annual profits. Basically, you should be able to show that you’re reliable, you’re business savvy, and you’re responsible.

The more you fall short of these expectations, the more likely your best bet is to go with an online lender. If you outright have bad credit, for example, you may just have to settle with high-interest rates from one of these online lenders.

Additionally, if you need to get your loan completed as quickly as possible, an online lender will be more able to fulfill those needs.

One factor that you should consider is whether you want to work with a lender that you have a history with. For instance, if you’ve successfully taken out loans with your bank in the past and paid them off without any problems, this may help make the application process smoother.

3. Prepare for the application process

There are various pieces of information that a lender will need to have before they can properly judge your eligibility for a small business loan. First, you need to include relevant information about your business.

This includes the name of your business, its address, and its tax ID. Another important thing to include is a business plan, as well as information about what you intend to do with your loan. Having a report that is both thorough and concise is a good way to convince a lender that lending to you is worthwhile.

Next, provide the lender with your financial information, both for you and your business. Provide your annual revenue, which includes both your profits and losses, as well as tax returns and bank statements.

You may also have to provide information about people who have more than a certain percentage of ownership in the company.

In some cases, you may need to provide collateral in order to ensure that the lender is able to get their money back should you default on the loan. Another guarantee comes in the form of your signature, which they may get on a personal guarantee that you intend to pay this loan back.

Once you’ve gotten all of this and finished your loan application, the next step is to review your application. The last thing you want to do with something important like this is to let a potentially major mistake be missed.

At best, a mistake in an application may cause the process to take longer than it should. However, at worst, an improperly made application could make the lender simply choose not to lend to you.

4. Submit your application

Once you’ve ensured that you have all the necessary materials and submitted the application in the correct way, the next step is to simply submit your application.

As mentioned, the length of time it takes for the application to be approved or rejected will depend on the lender.

You can look online for reviews of your lender of choice, which may indicate how long you can expect to wait.

Additionals:

• How To Find the Right Loan for Your Business
• Top 5 Benefits Of Small Business Loan for a Successful Startup
• A Complete Guide to Business Loans and Debt Consolidation
• How Does a Business Loan Broker Work? | Using A Broker or Apply Directly