There are approximately 30.2 million small businesses located in the United States. Obtaining a loan as a small business owner can be a challenging task. Banks have strict requirements regarding qualifications. Being prepared ahead of time can help increase your chances of getting the funding you need. Here are five tips for securing a small business loan.
Gather Financial Documents
Before you try acquiring business lending, prepare in advance. If you can, pay off any outstanding debts and improve your credit score. Gather your financial records and business plan for growth. You will need documents such as your Profit and Loss statement, bank records, and licenses. Be prepared to also provide your personal financial records as well.
Estimate Your Risk
Lenders dislike risks when it comes to approving a small business loan. Having a poor credit history, little collateral, and small sales numbers can increase your risk to lenders. By knowing your potential risk, you can make improvements and negotiate the case for your business on why you should be approved.
Create Cash Reserves
Set aside cash reserves ahead of time to be used for repayment of small business loans. Create a business savings account that you can show the lender to prove your ability to repay. Having savings on hand can prevent you from having to put up personal property as collateral.
Consider Various Loan Types
There are various loan types to consider in order to choose the best one for you. Short and long term loans provide lump sums of money that you repay over time with interest. An SBA loan can be applied for through the Small Business Administration and offers flexible terms. Lewis and Clark Development group can help guide you secure an SBA loan for your small business. Business lines of credit can be used and repaid only when you use the money. You can also apply for equipment financing or alternative financing.
You don’t need to select the first loan or refinancing opportunity you receive from a lender. Research various lenders online and compare various offerings, terms, and conditions that are available. Consider at least three or four lenders before making a decision on what’s best for you.
Acquiring a small business loan requires that you do thorough research in order to determine which business lending options are best. Anticipating what lenders are looking for will help greatly improve your chances of getting approved. Take your time and understand all terms and conditions thoroughly before signing any small business loan application.
Contact Lewis & Clark Development Group to learn more about funding your small business