Most companies require additional financing to help them start-up or to spur further growth. However, the process of acquiring a business loan may at first seem daunting. Here is a step-by-step guide that can make your business loan application more manageable.
Assess Your Ability to Qualify
To find out if you qualify, first, obtain your credit score from one of the major credit bureaus or a finance website. Keep in mind that banks may require a fairly high credit score, but nonprofit microlenders and other sources may be more lenient in their requirements. Lenders will also want to know how long your company has been operating, your annual revenue, whether your cash flow is strong enough to handle monthly payments, and what sort of collateral you have to secure the loan.
Determine the Appropriate Loan for Your Situation
Lenders offer various types of loans depending on your company’s needs. For instance, if you are just starting a business, you may need to finance it through personal loans or credit cards. If you need to strengthen your cash flow so you can cover standard expenses, a line of credit might be the answer. If you need a substantial sum to grow your business, you may need a traditional business loan or an SBA loan, which is backed by the government.
Find the Right Lender
If your company has been in existence for two years or more, your credit score is high, and you have the time to go through the drawn-out application process, getting a business loan from a traditional bank may be right for you. However, if you need financing quickly, your business is new, or you don’t have collateral, you can approach online lenders for financing. If you only require a small amount, consider nonprofit microlenders.
Regardless of which lender you approach and what type of loan you apply for, you will need to submit certain documents. Be ready with your business plan, financial statements, bank statements, tax returns, and other documents such as leases, articles of incorporation, and franchise agreements.
Make Your Application
Once you have everything ready, compare the various possible lenders, taking into consideration details such as APR. Apply to the lender that offers you the best terms.
For more advice on obtaining a business loan, contact Porter Capital Group.