Are you in search of guidelines or ways to get a Small Business Loan? You don’t need to worry, in this article, we will be discussing on some step-by-step guidelines to follow, in order to get a Small Business Loan. In the meantime, Small Business Loans can help promote your business and take it to the next level. Also, you can get loans to expand your business into new territories, improve sales and marketing efforts and hire new people in your company or organization. In fact, the importance of Small Business Loans is so wide and cannot be over-emphasized.
As you know starting business costs a lot of money; funding your business whether on a small, medium, or large scale is the first step to improving your business. That is why it is imperative every business owner learn how to get a Small Business Loan. You can either get small business funding from a large number of traditional or alternative lenders online. Nevertheless, there are always guiding principles that need to be followed when obtaining these loans. The first is understanding How to Get a Small Business Loan. Now, check out the next outline for step by step method on How to Get a Small Business Loan.
Step by Step Guidelines on How to Get a Small Business Loan
As stated above, getting Small Business loans is important especially when you’re in need of quick funding for your business. It can help grow your business and take it to the next level. And to help you get started, we have compiled steps and guidelines to follow on how to get a Small Business Loan. Here are some of the step by step guidelines to follow whenever; you are in search of small Business funding;
1 Determine what type of Loan you will need to Fund your Small Business
The first and foremost thing to do when in search of small business loans is to first determine what type of loan you will need for your business. This is because lenders will always ask you what category your loan falls under and also help to determine if the loan is right for you. Besides, there are different types of Small business loans available.
And option varies due to your business needs, length of the loan, and terms. Some examples of Small Business loans include; Small Business Credit Cards, equipment loans, SBA Small Business Loans, and a lot more. So, always make sure to determine the type of small business loan you need and this can be done based on your current business needs.
2 Make Research on Available Small Business Loan Lenders
Once you have determined what type of small business loan you need, the next step is to make research available to lenders. As you know, aside from small business loans, there are also medium and large business loans. While most lenders offer the three major types of business loans, others deal in just one type of loan. The fastest and easiest way to make find the right small business loan lender is by performing online research.
You can decide to get small business funding loans from Direct online lenders such as PayPal, Large commercials Banks such as Wells Fargo, Citibank, or local community banks. This totally depends on you and to make this happen, you will need to make research online.
3 Know if you are qualified for Small Business Loans
Another important step to getting a Small Business loan is by determining your eligibility. You can know if you qualify or not for small business loans by first checking your credit score. One of the factors that can help you get a Small Business Loan is by having a good credit score. Without a good credit score, you might struggle to get loans from any lender. Your credit score must be 680 and above; to check your credit score you can make use of FICO to get started.
In addition, how long you’ve been in business can help determine if you are qualified for a loan or not. If your business is just two months, you might likely not get loans. But a business of at least two years might qualify for loans in some banks. Lastly, lenders require minimum annual revenue to determine if you are qualified for a loan. The amount might range from $50,00 to $250,000 depending on the lender you are making use of.
4 Determine the best Payments you can afford
It is imperative; that you know to determine the best payments you can afford. You won’t like to apply for a loan that you won’t be able to pay back. To do this, you need to evaluate your business financials such as your cash flow. While some lenders require daily repayments or others might require you to pay monthly. So, it is important you select the best payment method you can afford and you can do this by removing all your important expenses such as rent, business income, and more. Then, check out how much is left before applying for determining the best payment you can afford.
5 Decide whether you want a Secured or Unsecured Small Business Loan
Another guiding principle to getting a small business loan is by deciding if you want a secured or unsecured Small Business loan. Secured Loans require you to have collateral before you can get loans and these include, your business property or equipment; failure to pay back the loans, lenders will seize your collateral.
On the other hand, an unsecured loan doesn’t require any collateral but they are hard to find. Therefore, it is important you carry out research when searching for small business loans and also make sure to compare lenders. You can compare lenders by also making use of online websites.
Information and Document Needed to Apply for Small Business Loans
After learning the steps and guidelines to follow before getting the loans, you need to be aware of the information and document needed to get these loans. Here are some of the documents and information needed to apply for small business loans;
- Your Business Name including any DBAs
- Federal Tax ID
- Legal Structure such as S Corporation, LLC, or C Corporation
- Your business financial statement for the past three years or less
- List of executives’ offers and their background
- Requested Loan Amount
- Potential Collateral
- Business Plan or executive summary
- Tax return of your Business
- Business Bank Statement
- Projected Financial Statement
- Your business credit report
- Copies of general and key man liability insurance policies
- State fillings for your business or company
Once you have the above-listed documents and information, you can proceed to apply for a Small Business Loan from your desired Lender. Note that; you might be asked to provide extra documents or information based on your lender.
