Are you looking to secure a business loan?
Maybe you’re in the early stages and you need startup capital. Or your business has been around for a while, but you need money some working capital.
Regardless of your situation, getting a small business loan is a smart move. A loan, from the right lender, can boost your business greatly.
However, if you’ve never taken out a loan before, you might not know how to go about it.
That’s where we come in. Continue reading to learn how to get a loan for a business.
Know Your Business Credit Score
Unless you’re yet to officially start the business, it’s highly likely that your company has a business credit score.
That’s right, businesses too have credit scores. Like individual credit, business credit helps lenders determine your businesses’ creditworthiness.
If you’ve taken out some form of business credit before and failed to repay it on time, you probably have a bad credit score. Either way, the only way to know for sure is to get a copy of your business credit report.
If it’s good or excellent, thumbs up, you’re ready to proceed to the next step. If it’s below average, you’ll need to take steps to rebuild it before applying for a loan; otherwise, lenders will reject your application or charge you exorbitant rates.
Prepare Your Business’ Financial Documents
A business credit score can only tell lenders so much. They need more information to establish whether your company is capable of repaying the amount you’re borrowing.
This is why you need to prepare your business’ financial documents, including bank account statements, profit and loss statements, and your business plan. If you’re in the startup phase, you’ll need just your business plan.
Ensure these documents are up-to-date and, where necessary, certified. A small business accountant or consultant can help you prepare them.
Shop Around for the Best Lender
The business lending market is awash with lenders of all kinds, from traditional banks to credit unions, online banks, and money merchants.
These lenders offer varying terms and conditions on their business loans, so you’d have to do extensive research when you want to find the most suitable lender for your needs. Check out this complete guide to the various types of business loans you can apply for.
To a large extent, the nature of your business credit will determine the lender you’ll settle on.
For instance, if you’ve got good credit and you can prove that your business is profitable, you can get a bank loan. Banks and credit unions typically offer the most favorable terms on their loans. You’ll get a low-interest rate and a longer repayment period.
However, if your credit stinks but you can’t wait to rebuild it before applying, you’ll have better luck with informal lenders. These companies typically offer loans to businesses with bad credit, but they charge high rates and offer short repayment periods.
How to Get a Loan for a Business Made Easy!
A loan managed prudently, can keep your business going during times of shaky cashflows. However, with so many credit facilities readily accessible, you have to know your way around them. With this guide on how to get a loan for a business, you’re now in a better position to secure credit without breaking a sweat.
Keep tabs on our blog for more small business tips and insights.