Money is the lifeblood of any business. It is used to pay everything from your landlord to your employees. Sometimes you might want to borrow some money. This could be for an expansion or perhaps sales are slow this quarter. Or maybe you’re acquiring a new business. Qualifying for a small business loan is no small task. Here are some ideas to help guide you through the process.
Small business loans can sometimes be difficult to get. Have you considered something like a 401k loan or financing what you need with your personal credit cards? Perhaps you could ask a family member for a loan? You might need to personally sign for a business loan unless you are established.
Small business administration
First, you will need to decide if you want a small business administration (SBA) loan. The SBA does not actually lend out money. But it helps organize financing. The federal agency guarantees it and the often have below market interest rates. The one catch is that they are often hard to get. The application process can last months. It would be helpful if your business is older than two years and is profitable. The SBA likes to lend to safe borrowers.
Often you will need to personally sign for your small business loans. That means it will benefit you greatly if you have a good credit score. You can download a free credit report every year from annualcreditreport.com. Or you can get an estimate from creditkarma.com Be sure to look at your listed creditors. If there are any errors, dispute them. Keep up to date with your credit cards and such. Building an excellent personal credit score takes time but is well worth it.
Fortunately, in the modern world there are many options for credit for a small business. If you’re just looking for a relatively small amount for working capital, consider a business credit card. It’s a less lengthy application process than a regular loan and usually has a higher success rates.
If you want a regular small business loan, start building a presentation. Have a nice and attractive printout that displays all the key figures.
Start meeting with banks. Your first meeting might be awkward but keep perfecting your pitch.
Get your paperwork ready. You’ll need not only things like identification, but your income and business tax returns.
Small business loans drive expansion. If your business needs one, prepare for a long process. However, it is often worth it in the end.