64% of small business owners start with $10.000 or less. They’re primarily self-funded. If you, as a small business owner, need access to working capital, be aware it may be challenging to get approved for a small-business loan. So, you need to prepare well so that to increase your chances of getting a loan. What do you need to focus on?
- Reason You Need Funding
Lenders would like to know the reason you’re applying for a small business loan. Determine whether you need it to start your business, manage day-to-day expenses, grow your business, or maybe to have a safety cushion.
- Loan Type
Decide which type of loan you need for your small business.
- Best Type of Lender
You can get small business loans from a number of lenders, such as banks, nonprofit microlenders, and online lenders. They offer different products, so you should find out which one is the right option for you.
One of the best ways to obtain a small business loan is to turn to online lenders. They’re a perfect option especially for those small business owners who lack collateral, time in business, or need funding quickly.
Consider applying to a reputable alternative online lender and payment processor like First American Merchant. Firstamericanmerchant.com (FAM) is an award-winning business funding provider that boasts an A+ rating with the BBB and offers unmatched business financing opportunities, including a merchant loan, to merchants of any type and size.
- Available Lenders
Research the lender. You can find many of lenders through a simple online search.
- Your Credit History and Credit Score
If you’re a startup or have been less than 3 years in business, lenders will focus on your personal credit history, as well as your business credit history. Before applying for a small business loan, get your personal credit history in order.
- Your Business Plan
A good business plan can help you get approved for a loan with just about any lender.
- What Your Lender Will Pay Attention to
Get ready to provide the information your lender would like to know. These may include your credit score/credit report, outstanding loans and cash flow, assets in the business, time in business, investors in the company, financial statements, and ability to make the payments.
- Your Documents
Make sure your paperwork (e.g., balance sheet, income and loss statements, cash flow statements) is complete, correct, and thorough. Together with your application, you may be asked to provide documents like business and personal tax returns, business and personal bank statements, business financial statements, and business legal documents.
- 9. How Much You Need to Borrow and How You’ll Use the Funding
The lender will ask you about the amount you want to borrow and how the loan proceeds will be used.
- Key Terms of the Business Loan
The proposed business loan should best suit your business needs. Draw a parallel between the available funding options before making your final decision.
- Your Online Profile and Postings
Lenders will perform due diligence, meaning they’ll pay attention to the information available online about you and your business. Make sure to review it.
If you need a small business loan, such as a merchant loan, get educated on the small business lending process so to be able to choose the best and the right one for your business wants and needs. Remember that it’s critical to turn to a respectable lender in the field.