Small business loans offer an excellent tool to expand your business to new areas, add new product lines, hire employees, and help your business grow. Qualifying for a loan often presents a dilemma, however. You want to borrow to make your business great, but lenders won’t approve unless you already are great. Concentrate on putting your best foot forward to prove value and potential to your commercial lender. When you follow our small business loan hints, you’re sure to impress.
Your Small Business Loans Checklist
To get approved, with the best loan terms, make certain you look like a sure thing. Here’s how to prepare for your business for commercial lender scrutiny:
Research loan types
There are many options to borrow against the value of your business. They include business credit cards (for short term needs), lines of credit, term loans, equipment loans, working capital loans (to sustain you through seasonal or other cash flow fluctuations), accounts receivable loans, and loans backed by the Small Business Administration (SBA).
Evaluate your chances
How is your business credit? Lenders will consider your credit report and score, (from Dun & Bradstreet), so check it in advance and correct any erroneous information. Lenders also evaluate your outstanding debts and expenses, and review business assets, to determine their comfort level with making small business loans. The longevity of your business is also persuasive, as are well-known investors, whose confidence in you helps to vet your business in the eyes of most lenders.
Consider offering collateral
You may get better loan terms if you use business assets to guarantee your loan, for instance: property, equipment and/or accounts receivable.
Document your selling points
Gather CPA-audited statements to show your credit-worthiness, asset value, and healthy cash flow. Documentation could include the credit report, P&L statements, projected financials, bank statements, tax returns, business plan, proof of insurance, proof of collateral ownership and value, and more.
Explain intended use
You must disclose the planned use for your loan, in most cases. Common uses include equipment purchases, company expansion, hiring, additional inventory, etc.
Polish up your online business presence, if necessary.
Make sure your business website looks professional and functions properly. Check your company and principals’ social media posts and pages, on LinkedIn, Twitter, Facebook, etc. Read your online reviews on Google and Yelp, because your lender will read them during their due diligence process.
To learn more about small business loans, contact the experts at IRC today.