How to Get a Business Loan
Sometimes, it takes money to make money. Whether you’re looking to launch a thriving business at the forefront of your industry or just getting started as a local service provider, a business loan can be an excellent way to secure the property, equipment and working capital you need to improve your small business. Learn how to apply and receive these competitive loans today.
The first step in receiving a loan is identifying your lender. Business loans can come from private companies, angel investors, banks and other financial institutions. Depending on the particular type of loan you’re looking for, there’s pros and cons for choosing each type of lender. Small businesses can also receive an SBA loan, which isn’t typically available for larger, more established companies.
The next step is to prepare your application. A loan for your business will typically require collateral, a credit score, and financial history. Each of these is essential for not only becoming approved for a loan but also receiving the best terms on your loan.
Check your credit score to see how you rate. Small businesses may use your personal credit score but look for ways to improve your business credit score as well. This will be more important for future loans as your business grows. A low credit score doesn’t necessarily mean you won’t receive a loan, but it could affect your rates and the amount of collateral that’s required.
Next, a lender wants to see your financial history. This is an important way to determine whether your business will be capable of surviving more than a few years and have enough working capital to make timely payments on the loan. Lenders don’t want to give you more money than you can pay back, so once you receive a loan they have a vested interest in helping you succeed.
Finally, many loans will require collateral to help ensure repayment. Should your business default on the loan, it’s typically very difficult for an investor to receive their payment in full. Collateral could be real estate, inventory, machinery or personal property that is valuable enough to quickly pay back the full loan amount.
With these three things secured, all that’s left is to apply for your business loan. Business loans should be large enough to cover the major purchase or payroll needs of your company, but small enough to handle and make affordable payments. Help your company grow and succeed with a flexible and affordable loan from a reliable lender.