Applying for a loan might not be as simple as it used to be, but don’t let that hold you back from getting one if you need one. Banks and other credit unions have become a lot more lenient regarding their lending requirements. As a result, it is a lot easier to find the loan you are looking for, and on your terms.
Follow the tips listed below to increase your chances of qualifying for a significant business capital loan from a reputable company, bank or credit union.
Begin before you need the money
There comes a time when a business cannot move forward without a significant financial push. Do not wait for that to happen before setting out in search of a creditor. Starting the process beforehand will save you costly delays when you need the money the most. Lenders often feel more comfortable working with a person, who has foresight, and business acumen. Lending companies base their decisions on a business’ money-making capability.
Decide how you will spend the extra money
Without a proper plan, you will end up wasting revenue on useless expenses. You might want fancy blinds for your office or an upgrade of those workstation Macs, but do you need all that? There are a few priorities all businesses need to sort out including utility bills, office rentals, and employee salaries. After you sort these out, look towards long-term investments. New high-production equipment, software upgrades, and real estate can become smart investments for your business. On the other hand, making up for past deficits and paying for the losses of the previous quarters is not the way you should spend the new sum.
Find out how much money will be enough
Not doing the calculations beforehand can lead to last-minute cash deficits. When entrepreneurs find themselves strapped for cash, many often turn towards short-term small loans for immediate money. It leads to multiple small loans, high-interest rates, and various repayment terms. Managing more than one loan is quite common among business owners, but why should you take the trouble, when you have small business lenders ready to help you out? For example, check out Sunwise Capital to learn the many ways such a lender can help you get the money you need. Also, having an accurate estimation of a list of possible expenditures will show your lender you have taken the time to do your research and are sincere in your desire to do business with them.
Learn what your credit score is
A FICO score between 780 and 800 is brilliant, and with such a score you will not face difficulty in finding amicable loan terms. Even a credit score between 650 and 700 is acceptable for most lenders. However, ensure that your personal debt payment is not more than 33% of your monthly cash flow. Most importantly, keep your business cash flow report ready for your application. Having a robust cash flow increases your business’ chances of receiving cash funding regardless of your credit score.
Think of a lender
It is wrong to believe that you cannot receive flexible small business loans from creditors other than the banks. There are several non-bank lenders, microlenders, venture capitalists and angel funders, who are ready to fund entrepreneurial ideas that promise a solid return. You might chance upon lenders like local banks and region-specific business loan companies that have interest in the economy of a developing business area.
If your business is in the property development sector, it can be hard to secure a loan with the volatility of the housing market, especially if you are a new client without much equity. The private debt market is a clever way for developers to get access to finance through boutique lenders such as Private Invest.
Prepare your loan package
The loan package is the paperwork that you need to submit for getting the business loan. The financial projections, personal information of tax returns and sound business plans for the upcoming procedures should be a part of this package. Some lenders also check out the business’ social media presence during the evaluation process.
Get ready to wait
The evaluation process at banks can take between two and four weeks. It might take even two months to get an answer. Do not badger the lender for an answer. Do not hold your breath. Instead, check for an answer in your mailbox or voicemail at the end of every week. People typically do business with people they like; the same holds true for your lender. If you make a nuisance of yourself before they’re ready to decide, you can count on it swaying their opinion against granting you the loan. Remember, most online lenders can get you approved and funded n a matter of days if not hours.
Finding a company to lend you the capital you need is not tricky, finding the right lender is where the difficulties arise. A reputed and genuine loan institution looks out for their clients. They check more factors than the years of experience, the credit score of a business and the loan amount. If that were not true, it would be impossible for the start-ups to get funding for their crazy and creative ideas.