Get Prepared for Applications to Business Loans
If you find yourself in need of additional funds for your small business, there are several options available. You can use traditional lenders such banks or non-bank lenders, or you can try alternative financing like a merchant cash advance, line of credit or even invoice factoring. When it comes to pursuing a small business loan, there are several things you need to keep in mind as you prepare to fill out an application.
- A lengthy process lies ahead. For starters, the application process for loan can be quite lengthy. If you know you need the funds within the next few business days, chances are you will miss your deadline if you apply for a conventional loan. The underwriting process will vary from lender to lender, as does the overall approval process, but you are looking at a few week to a few months before you see any funds.
- Have the documentation with you from the beginning.If you want to move the through the loan process more quickly, there are several documents a lender is going to want. By having these ready to go with your application, you might be able to avoid any major hiccups in the process. You will need to have your business plan; the lender wants to know what they are investing in. You will also need your company’s financials, whether bank or credit card statements, for the past few months. Lenders prefer to work with companies who have been in business for at least two years, so present a substantial snapshot of your company’s dealing within that time.
- Your personal or business credit will be considered. When you fill out an application for a business loan, the lender will take into account your credit score, whether as an individual or business. Be honest about your debt and open accounts, but understand that they may seriously impact your ability to gain loan approval.
- Have collateral available. If your business is just starting out, a lender will need some form of guarantee on the funds. This is usually by way of an asset that you put up for collateral. It could be a piece of property, a piece of equipment or financial guarantee from a retirement account. Have the paperwork, such a deed or title, with you as you present your loan application.
If you take these things into account, you will be in great shape as you present your application for a business loan.