HOW TO GET A BUSINESS LOAN IN 5 STEPS
Revenue is vanity, Profit is sanity, and Cash is reality. In other words, it’s the Benjamins who keep things flowing. Here’s how to get them and enable business growth.
Money comes from business growth. Yet business growth…. comes from money. That’s why most businesses find it crucial to obtain a bank loan at some point(s).
But it’s how you prepare to get that loan which determines whether you’re in for a welcome influx of lifeblood or stuck staring at the closed door after being told “We’re sorry”.
Here are 5 steps to ensure you’re a business banks want to do business with:
1. Determine Why You Need Loan
Before forking over significant funds to the welcoming accounts of your business, that lender is going to want to know where it’s going.
Morale-boosting staff trips to Vegas and group psychic therapy may be just what you need right now. But chances are that a lender wouldn’t see it that way.
New inventory, payroll, a move into a bigger location. These are the kind of ideas lenders like to hear. Make sure you’ve got the reasons they do. That’s the first thing to know.
2. Make Yourself Eligible to Get Loan
Banks and lenders analyze you to see if they’ve got a good enough chance at getting their money back at the end of the day.
Knowing in advance what they’ll be looking at will enable you to beat them to it and improve those metrics:
Credit score and loan history
This will be the first stat they look at. How’s your personal history? Have you managed credit cards well?
Collateral
In the theoretical event that the money will not be repaid – what assets do you possess that the bank can snatch in its place?Yes, this sounds grim But it’s (usually) only some necessary paperwork for both of you. They need to cover their bases for a worst-case scenario.
Cash Flow
In order for them to be confident enough that you’ll have enough cash to repay the loan, they’ll want to see your cash flow now. Banking on the potential future profit based on the loan isn’t going to cut it. Ensure you’ve got stable incoming cash flow for a while before you pick up the phone to call.
Time in Business
Your existence serves as proof that you’re viable. The longer you’ve been at it, the more data they have showing you know what you’re doing and your business model works.
3. Determine the Right Types of Business Loan
We’ll work with you to help identify which type of business loan could be the right fit for your business’s unique financial needs:
Line of Credit: A business line of credit provides flexible access to funds, up to a set limit, which can be drawn upon as needed, and you only pay interest on the money you’ve actually used.
Equipment Financing: Equipment financing is a loan specifically designed for the purchase of business machinery and equipment, where the purchased equipment itself often serves as collateral, reducing the risk for the lender.
Term Loan: A business term loan is a lump-sum loan, which businesses are expected to repay over a specified period with a fixed or variable interest rate.
SBA Commercial Real Estate Loan: An SBA Commercial Real Estate Loan, often referred to as an SBA 504 loan, is designed for businesses looking to purchase, construct, or improve commercial real estate; these loans are partially guaranteed by the Small Business Administration, typically require lower down payments, and offer longer repayment terms than traditional commercial real estate loans.
4. Provide Documentation Needed for Your Small Business Loan
Showing up with a promise and a dream will land you outside the door rather expeditiously. You’ll want to grace your entrance with some important documents:
Business and personal financial statements
Business and personal credit report
Business and personal tax returns
Business plan
Business forecast
State registrations and licenses
Legal documentation (articles of incorporation, commercial leases, franchise agreements, etc.)
Having these in order first is critical to any lender. Don’t take any shortcuts here.
5. Allow some time for the process
As with any financial dealing, this process may go quickly or may take some time.
Make sure you’ve got plenty of lead time for yourself and business plans before starting the process.
This sums up the main points of the process leading up to getting your loan. After you’ve been through all this, cash in your account gives your business the freedom it needs to fly and generate more of it.
We invite you to check us out at https://www.equireinc.com/ to see how we can help you get a loan quickly and easily!
Let Equire Inc guide you every step of the way and ensure your business growth is possible with a proper business plan.
Frequently Asked Questions About Small Business Loans
How can I get approved for a business loan without collateral?
It is possible to get a business loan without collateral, but it may be more challenging. Here are some steps to increase your chances:
- Business plan: Create a robust business plan to show lenders your company’s profitability potential.
- Good credit: Maintain good personal and business credit scores. Lenders often consider these scores when making their decision.
- Strong cash flow: Prove to your potential lenders that your business has a strong cash flow. If your business generates consistent revenue, lenders may see that you’re able to pay back the loan.
- Unsecured business loan: Look for lenders who offer unsecured business loans. These don’t require collateral, but often have higher interest rates.
- SBA Loans: Small Business Administration (SBA) loans are government-guaranteed loans which often don’t require collateral for smaller loans.
At Equire, we specialize in aiding businesses obtain funding solutions that are tailored to their unique requirements. We provide personalized financing options and expert advice that align with your specific business needs. So whether you are a startup seeking initial capital or an established company planning for expansion, our mission is to support you in securing funding that can propel your business forward.
Who can apply for a small business loan?
Eligibility for small business loans can vary by lender, but here are some general criteria for qualification:
- Anyone who owns a small business or is starting a business can apply.
- The business typically needs to be for-profit.
- Lenders usually require that the business is operating in the country where the loan is issued.
- The business owner may need to have invested their own time or money into the business.
- The business or business owner should have a decent credit score.
- The business should be able to show profitability or, at least, a sound business plan demonstrating potential profitability.
Our team of experts has extensive experience and knowledge in the financing industry. We work with a large network of lenders to find the best solutions for each business and meet their business financing needs.
How hard is it to get a small business loan?
The difficulty of obtaining a small business loan can depend on several factors such as the type of loan you’re applying for, your credit score, the profitability of your business, and the current economic climate. Some types of loans, like SBA loans, can be more challenging to obtain due to their strict requirements and lengthy approval process. Others, like business credit cards and short-term business loans, may be easier to get but could come with higher interest rates. In general, if you have a well-prepared business plan, strong credit, and your business is profitable, you have a good chance of securing a business loan.
Are you having difficulty obtaining a business loan? We take a personal interest in your success.
We take a personal interest in your success. Tailoring our advice to your unique profile, we provide customized guidance to help you secure the most suitable small business loan. Even if you have experienced a loan rejection in the past, our established network of relationships can aid in easing the loan approval process, ensuring there are no obstacles in your path to financial support.
What are the chances of getting a small business loan?
At Equire, we take a proactive approach to ensure that you have a good chance of loan approval before submitting your application. (We maintain an extremely high success rate of over 99% in securing loans for our clients). We collaborate with a broad network of lenders, each with distinct business loan preferences. This familiarity enables us to pair your business with the lender whose criteria and offerings best align with your specific needs. During the loan application process, we work closely with you to provide guidance and support, helping to ensure your success in obtaining the financing you need for your business.
