Are you in dire need of the surefire ways to get your small business loans application approved? Have you been seeking for business loans but to no avail?
If yes, then fret not as this write up will paddle you through all the necessary steps you need to take to get your business loan application approved.
Essentially, the chances of getting your small business loans approved depend greatly on the way and manner you present and introduce yourself, business and your financial needs.
Equally, there are many ways to obtain small business loans without stress but the commonest way is by writing an efficient loan proposal or effective business plan.
This is so because lenders take cognizance look at loan proposals as it serves as evidence that your small business establishment has a qualitative and better understanding of the competitive marketplace.
Plus, the lender will also need to inquire into your financial status so as to know whether or not you have the strength to fuel the loan. All these will be possible through your small business loans proposal.
Required Documents For A Small Business Loan Application
Before moving farther, it’s very ideal to identify the necessary documents that are needed to accompany your small business loans application. Though it differs, depending on the financial institution you’ll be approaching. Among them are;
- Business financial statements;
- Your personal and business tax returns;
- Your bank statements (personal and business);
- Your business or organization legal documents such as the articles of incorporation, franchise agreement and the likes.
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Small Business Loans: How To Get Your Application Approved
In the same vein, it is no brainier that one of the major problems that small business owners are encountering now is getting small business loans for their venture.
However, no matter how difficult it may seems, if you prepare well and follow the below strategies, your small business loans application will definitely be granted.
1. Let your reason for the loan be defined.
One of the reasons behind small business owners failure to secure small business loans is because they failed to define what the loans are meant for.
Hence, before you approach any financial institution for a loan, ask yourself why you need the loan. If you don’t, the lenders will and they’ll be expecting a genuine response from you.
While preparing to seek for some small business loans, endeavor to put it at the apex of your mind that the loans are either meant to kickstart a business, to grow it or to manage and furnish your existing business establishment.
With such candid and convincing points, there’s high tendency that lenders and other financial institutions might consider you for your desired small business loans.
2. Compare the various small business loans scheme to your business.
Another important thing to do as a small business owner who is struggling to secure a loan for his business is to look at the available business loan schemes.
That is to say, the major reason why your business need such loan will determine the nature and scheme of the small business loans you’ll be given.
So if you’ll be creating a new business venture, don’t expect lenders or financial institutions to consider your loan request. One of their requirements for granting loans is a convincing cash flow.
Lenders expected loan seekers to have a cash flow that indicate that they could repay the loan if granted. But as a new start-up, this may be difficult.
So to bit this hurdle as a new business owner, your business credit card is there for you as a shield. You can also use the family and friends loan scheme, the crowdfunding scheme, the microloan and the likes.
what’s more, if your business venture has been in existence for more than a year with a consistent revenue history, you may also consider some other small business loans lenders like the SBA loans, business credit line and invoice factoring, term loans, etc.
3. Let your lender be defined.
Another reason why small business owners do failed to secure loans from lenders is because they don’t define which institution is better for their business.
There are numerous lenders and financial institutions out there that gives small business loans. There are banks, microlenders (non-profit), online lenders, etc. that are offering the various types of business loans schemes.
So before you choose and determine the lender you’ll approach for your business loan, endeavor to compare and contrast 2 to 3 available options and see which of them is easy to refund.
If you are so sure that you have a good line of credit, you have collateral or you don’t need the cash as soon as possible, then it is accurate and ideal if you approach banks for your small business loan.
Similarly, if your business venture is not that big or you don’t have any collateral security, it will be difficult to get a loan from banks and as such, you should approach microlenders for the business fund consideration.
Also, you can visit online lenders for your small business loans if you have a poor operating history, lack of business timing and you seriously need the business fund at the moment.
However, be enlightened that your chances to get a business loan and funding with online lenders is higher and faster compare to the traditional banks and microlenders.
As such, it’s up to you to examine the three critically and see which will work best for your small business organization before making a decision.
4. What do you have in your credit score?
Your credit score history has a significant role to play in your sojourn to secure small business loans. If it’s too good, your chances are high but if it’s poor, there’s a problem.
A copy of your credit spectrum threshold is needed by the financial institutions in order to determine whether or not you’ll be able to repay the business funds if granted. In case your credit card is very poor, you can repair it via your local credit line counselor.
Essence, to know your credit score history, there are three notable bureau that can gives them to you upon the request. You can visit TransUnion, Equifax, and http://Experian.com. These bureaus do give out credit spectrum history at least once a year.
Accordingly, most banks do request for a credit scores threshold that is not less than 680 in consideration for small business loans. Should your credit score falls under that figure, online small business loans and microlender might work well for you.
That is to say, you don’t just write an application to a lender or financial institutions for a loan, you need to consider your credit threshold first. Doing this will gives you an insight on which institution to approach.
5. Apply for the small business loans.
Having considered all the above points and everything has been put in place, now is the time for you to put your documents together and apply for the loan scheme that suit your small business needs.
To be on a safer side, you can submit your loan request to several small business loans bureaus without disrupting your personal line of credit. At least, one of them will consider your application eventually.
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However, don’t forget to include all the necessary documents highlighted above that are needed to accompany your small business loans application.
After you must have submitted your application to the financial institutions, in the course of their review, you may be call upon to answer some of the following questions:
- Your years of business?
Aside from your business credit score history, some lenders may still demand to know your business experience by asking for your business years. At least, you must have stayed in the business for over a year before you can be qualified.
- How much do you earn in a month?
Such is another kind of question that awaits you. Most of the online lenders will consider you even if your revenue is very low. But be careful with other lending agencies, they always consider a borrower of higher monthly revenue.
- Will you be able to pay back the fund?
Of course, you should expect this kind of question too. Before you apply for the business funding, you should carefully examine your business financials cash flow and evaluate your business spending curve.
Seeking for a small business fund is one thing and tour ability to refund them as at when due is another. In other not to put yourself and business into trouble, always look at this side of the borrowing process too.
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One thing that keeps a business flowing and even ahead of its potential competitors in the competitive market is fund. It Importance to a new and already established business cannot be overemphasized.
Equally, the nightmare of every small business owner is their ability to get small business loans to finance their business. But with the above guidelines, chances are that your business grants application will be approved.