Whether you’re just starting a new business and need funding to help cover your startup expenses, or need even more capital to expand your current small business, a small business loan can offer the cash you need. Here are some guidelines from Small Business Administration (SBA) that will help you determine if you qualify for a small business loan.
Have a Solid Business Plan
Whether you are applying for a business loan from both traditional lender and alternative lender, a comprehensive business plan is must have document that you need to have. You have to show that you have an organized and well thought out plan of action and provide an explanation about how you plan to spend the loan amount in a productive way to achieve your objectives.
Your Personal Credit Must Be In Good Shape
You need to have a solid credit history with the intention to qualify for a small business loan. Small business lenders want to see how you have managed debt in the past and make certain that you do not have a history of late or defaulting on payments. This goes a long way in assuring them that you are accountable with your financial commitments.
Have Assets That Can Be Used As Collateral
This can consist of equipment used by the business, real estate or commercial vehicle. It is generally less difficult to get a loan secured by collateral, and you may probably qualify for better interest rates if you are ready to back up the loan amount with your valuable assets.
Decide How Much Money You Need
All lenders require that the business owner put some of his personal cash into the business. This reveal to your lender that you believe in your business enough to risk your own money. Normally lender will not offer 100% of the financing amount, in fact they want you to invest your almost 20% of equity in the business. The more equity you invest in your business, the more favorably the small business lender will look upon your loan application.
Update Your Resume
This might seem an unusual thing; however most of the business lenders need to see your work history. You may not be interviewing for a job, but you need to demonstrate that your education, experience, and activities set the basis for your success as a small business owner.
The more professional and expert you seem, the higher your chances of getting a small business loan.
List All Your References
Your reference list can include both your personal and business references. Previous colleagues and managers, in addition to vendors and customers who can guarantee for you and for your business.
At present, there are thousands of small businesses within the US. Whether you succeed or not is a matter of being organized, dedicated, and prepared. Traditional lenders as well as alternative lenders are out there ready to help you succeed; but you have to meet their lending criteria. By following these suggestions you should have an excellent chance at getting a small business loan to establish or grow your small business.