Getting your first small business loan can be a daunting task, but it doesn’t have to be. By following these three tips, you will not only get approved for the loan more quickly, but you’ll also save money in interest payments and fees. In addition, the article discusses how to apply for loans online and the available different types of financing.
Educate yourself on the basics of small business loans.
SBA loans
Small business administration, also known as SBA loans, is one of the most common small business loans. When you take out a loan from the SBA, it is also referred to as an “SBA guaranteed loan.” The government agency provides insurance on these loans and guarantees 75% of the total amount to banks or other lenders for them to approve your application.
Get your paperwork to apply for the loan. Small business loans can be perfect for new businesses that might not have a lot of collateral or assets yet. The small business community is diverse and constantly growing, so finding the right lender should only take you a few minutes since there are over 20 options out there waiting to do an SBA loan.
Credit bureaus
Small business owners should also check their credit scores with the major bureaus. Keep in mind; your personal and business loans may affect each other’s scores differently. Likewise, personal bank statements and business income and expenses should be separate.
Business plan
A well-written business plan is a must if you want to get approved for a small business loan! Your lender will be looking at things like cash flow, your personal financial situation, and a clear plan for the business. Additionally, bank loans can also be an option.
There are many things to take into consideration when it comes to applying for a small business loan, but the most significant factor is your credit score which will determine if you get approved or not. Hundreds of loans can sound like a lot, but this guide contains all that information and more.
We want our members to succeed, and we want you to know that if you’re looking for a small business loan, think GFA Federal Credit Union.
Find out if you’re eligible for a small business loan – what are your qualifications, and why lenders give you money.
Do your research on small business loans and what you need to apply for a loan. Then, figure out if you’re eligible – What are your qualifications, why should lenders give you money?
Researching different types of loans available from banks or other financial institutions helps both with the start-up costs and ongoing expenses. In addition, this shows potential creditors that you’ve done careful homework before applying for credit, and it demonstrates serious intent on your part – something they’ll consider when deciding whether or not to accept an application from you.
Credit history
This is one of the most significant factors when it comes to loans. What credit score do you need to get a loan? It’s recommended you have at least $100,000 in annual revenue and two years of tax returns. A personal credit score of 680 or higher is ideal, but anything over 600 will still get you through the door.
If your credit score isn’t in great shape, don’t despair. “Banks are looking for borrowers with good to excellent credit scores when it comes to small business loans,” says Sheryl Garrett, founder of the Garrett Planning Network, a network of fee-only financial planners.
Collateral
What kind of collateral do I need to put up for the loan? The answer is that it depends on who you borrow from. Please speak with your bank or credit union about what they
How much money will a small business loan cost me in fees, interest, and other costs? The short answer is that there’s no simple answer for this question – each lender has their own rules about what they charge borrowers and how much their loan rates are.
What should I look for in a small business lender?
Customer service is always at the top of the list – do they have good customer support? They also need to be flexible with their repayment terms because things change, especially when running a small business. Business owners will often look for lenders who offer competitive interest rates and fees.
What is the difference between a traditional business loan vs. one that uses SBA financing?
A significant difference in an SBA loan is that they are backed by the Small Business Association (SBA) who insures your private lender against any loss if you were unable to repay your small business loans, making it easier for these lenders to approve your loan. The SBA does not insure traditional business loans.
Research different types of loans available from banks or other financial institutions that can help both with the start-up costs and ongoing expenses. Doing this will show potential creditors that you’ve done careful homework before applying for credit.
This is important because it shows them that you have a good sense of how much cash they’re willing to lend. Still, more importantly, it demonstrates serious intent on your part — something they’ll consider when deciding whether or not to accept an application from you.
Think about what type of loan is best suited for your needs if a bank isn’t an option.
Figure out how much you need to borrow – lenders are most interested in this amount, so don’t be afraid to ask them questions on the front end. Figure out how much you need to borrow and also find ways to cut back on expenses. Again, lenders are most interested in this amount, so don’t be afraid to ask them questions on the front end and do some research before applying for a loan.
Be prepared with documentation – while you might not need all of these documents when applying for your first small business loan, it’s always best to have things ready if the bank wants to see them.
Make sure your credit report is accurate and up-to-date before going to apply for a loan.
Figure out what types of loans are available and how each works before you apply. Think about things like interest rates, repayment terms, and fees when comparing different small business loans. Figure out the best type of loan based on your credit score, collateral, etc. Make sure to check that your credit report is accurate and up-to-date before applying for a loan.
Get started with your application process today!
Online lenders make it easy for you to apply online. As a business owner, you need to have a complete understanding of your financial standing. You must be able to provide the necessary documents and figures for an extensive application process. This should include accurate sales figures, credit scores, income statements, and more so that lenders can determine whether or not they will approve your loan request./
You can now take care of everything without leaving your home or office! A financial institution will likely ask for repayment terms that can be as long as several years. You will need to have a payment plan in place if you are approved so the lender knows how much money they may get back from your monthly repayments.
Do not hesitate to ask questions about anything you don’t understand.
Do not hesitate to ask questions about anything you don’t understand. You should always feel comfortable asking your bank or lending institution what every term in the loan agreement means before signing on the dotted line. It is crucial that you fully grasp all of these details to avoid any surprises down the road.
Don’t worry about missing a payment deadline, as most banks will give you some leniency if something unexpected comes up that prevents you from making your monthly payments on time.
Although it may be tempting to go with the first bank or lending institution that offers you a small business loan because of how badly you need capital for your business, there are many banks and lending institutions out there who would love to work with your company, so take some time to consider all of your options.
Do not sign any documents until you have read them over thoroughly and understand them fully.
Don’t be afraid to ask questions if something is confusing or unclear. It helps when banks can put potential borrowers at ease about the loan process to feel comfortable asking questions before signing on the dotted line.
Don’t be afraid to compare rates at different banks or lending institutions so you can get the lowest costs possible. Unfortunately, banks are not all created equal when it comes to small business loans, and there is no shortage of variables that determine how much your bank will charge in fees for a loan.
In conclusion
There are many factors to consider when looking for a bank or lending institution that will help you with your financial needs. Hence, borrowers need to carefully compare rates and repayment terms before settling on the best option for their business. Unfortunately, banks are not all created equal when it comes to small business loans, and there is no shortage of variables that determine how much your bank will charge in fees for a loan.
You should always feel comfortable asking your bank or lending institution what every term in the loan agreement means before signing on the dotted line. It is essential that you fully grasp all of these details to avoid any surprises down the road.
