Funding is important to keep a small business afloat. But how do you apply for a business loan? What is required of you and your business and what should you be looking for in a lender?
Navigating through the loan process can be daunting. You need to find the best small business loan option and the right lender that understands your business needs.
Rather than trying to conform your finances to your loan, it is usually best to find an option that suits you and your business.
Understanding Different Business Loans and Financing Options
There are several different types of small business loan products to choose from and different types of lenders. Some will be a better fit for your business than others because each product has its own set of qualifying criteria, payment schedules, risks, and benefits.
According to aboutmoney.com, you can turn to the traditional types of lenders, like banks, the Small Business Administration and credit unions, but if those do not meet your needs, there are alternatives that may offer better solutions.
How to Apply For Business Financing
Before applying to any lender, you should look at the criteria set by the institution and determine if you stand a chance of qualifying.
According to bloomberg.com, it is very difficult for a small business owner to meet the guidelines set by banks and credit unions today, which demand excellent credit, extensive financial history, and collateral.
What You Need to Apply to a Bank or Credit Union:
You typically need an excellent credit score and credit history to even be considered.
The bank or credit union will ask for an extremely detailed business plan.
They will want to see everything about your business documented (your competitors, recent growth, projected revenues) and a well written, detailed marketing plan.
You will need to turn over copies of your tax and bank records.
Personal finance records may be required.
You should have proof of your collateral ready for review.
Disadvantages to Applying Through a Bank or Credit Union:
This is not a quick solution. Bank and credit union small business loans can take 30-60 days to process.
You may go through most of the time-consuming process and later be denied. This is common.
If you have had credit challenges in your business, lack credit history, or do not have valuable collateral to offer up, these are probably not the best choice in loan options.
Applying for a Small Business Administration Loan
The Small Business Administration (SBA), is a government agency created to help small business owners like yourself.
The SBA offers several loan products; general purpose 7(a) and 504 loan programs, for special purposes and business needs. The SBA does not issue the funding, but rather connects the borrower up to one of their lending partners.
They require everything the banks and credit unions do, often in more detail, but maybe more flexible with credit score requirements.
Disadvantages of Applying For SBA Loans:
Your loan will take more time to process because you are satisfying both the SBA and a lender. You may wait up to 90 days or more to get your loan.
Your managerial and business experience, your overall business plan and even your basic work skills can be scrutinized in the decision process for the loan.
How to Apply for a Small Business Loan with Alternative Lenders
Alternative lenders are the leading way most small business owners find a loan product that fits their needs today.
They can provide several funding options including small business loans, with a focus on ease in the qualification process, speed in getting you your money, and flexibility in the terms and repayment schedule.
Simply fill out a basic application online.
Provide a couple of months of your bank statements to show the health of your business.
The approval process will only take a few days for you to receive an answer.
There are several small business loan options available to you and it is important to find the one that offers you the right terms, ease of application, approval process, and time to funding.
https://www.credibly.com/wp-content/uploads/2015/07/Biz-loa-700x467.jpg467700adminhttps://www.credibly.com/wp-content/uploads/2018/04/CrediblyLogo-1-300x138.pngadmin2015-07-05 10:35:332018-06-12 12:17:14How Do You Apply for a Business Loan?