High risk merchants and new businesses often have a hard time acquiring business loans. Lenders view these merchants as undesirable and unnecessarily risky. However, it is possible for new entrepreneurs and high risk merchants to attain the necessary loans to start or sustain their businesses. The following are a few steps to getting a business loan.
Make Connections with Lenders.
Before asking for a loan, make connections with lenders. It is important to build relationships with key contacts within financial institutions. Remember, these contacts will pay off when you do decide to ask for a loan.
Know Your Score.
Know your personal and business credit scores. Many lenders will look into the business owner’s personal credit score as an indicator as to how they will manage their business. A credit score between 650 and 700 is acceptable, but most lenders like to see a credit score in the 700-800 range.
Decide How Much You Will Need.
Many entrepreneurs don’t ask for a large enough loan. Underestimating can leave businesses short of capital which can lead to problems. However, overestimating will make lenders question the owner’s business acumen and creditably. Having a well thought out budget that is supported by positive financial projections will give lenders more faith in the viability of your business.
Know How You Will Use the Money.
Decide what you will need the money for. There are good reasons and bad reasons to apply for funding. Good reasons for business loans include real estate, office equipment, software development, or personnel. Bad reasons for applying for a business loan include: office build outs, buying non-essential business items, funding ongoing losses.
Find a lender.
Find a lender that suits your needs. There are a variety of loans available to new businesses, but some may be better than others. The following are a few types of lenders to consider:
Commercial Bank Loans: This is a traditional loan, but applicants must meet strict standards.
Region Specific Lenders: Local community banks and credit unions have an interest in the local economy, and may agree to invest in certain businesses that they believe will be helpful to the community.
Micro and Alternative Lenders: Crowdfunding sites like IndieGoGo and Kickstarter can generate capital up to $10,000. Other sources like The Lending Club and Prosper are peer to peer sites that provide personal loans.
First American Merchant offers a high risk cash advance to companies that traditional lenders avoid. FAM offers simple and flexible loan programs that will provide your business with the funds necessary to survive within 72 hours. Plus applicants won’t need to supply tax returns or financials. Get the money your business desperately needs. Contact us now to start your application.