It’s no secret that business loans are not easy to obtain, especially for smaller ones with no credit or poor credit. However, there are a variety of options available, and once you decide which solution is right for you, you can start preparing. Obtaining a business loan can help your business grow, expand, improve marketing efforts, fund new research and product development, and more.
Is your company solvent? Ultimately, lenders make the decision to grant or not a loan based on the risk profile and credit history of the borrower. They will examine factors such as:
• Report and credit score
• Assets in business
• Any outstanding loans and cash flow
• Your investors
• Years of experience in the business
• Financial statements
If you are just starting out or your business does not have the best credit history, it will be more difficult to obtain a loan. You will most likely have to provide something as collateral and will have to deal with higher interest rates. This is also one of the reasons you should submit a list of your assets for lenders to review so they know what to do after you end up defaulting on the loan.
Financial review when obtaining a business loan
Your cash flow and outstanding loans will be reviewed to determine if you will actually be able to repay the current loans that you are already obligated to repay AND any new loans that may be granted to you (plus interest).
You will need to determine how much money you will need to request and why. Every dollar you ask for must be accounted for. As mentioned above, there are a variety of reasons why businesses are interested in obtaining a business loan, whether it’s to manage day-to-day expenses or to invest in new equipment. You don’t want to just “estimate” how much you will need, or you could end up with more debt than you need or less money than you really need. It will take some time to calculate everything based on detailed cost projections and the amount you can afford in monthly payments plus interest.
If you haven’t in a while, be sure to check your credit. If your business is already established and you have borrowed money before, you will have a business credit score. If you haven’t been in business for a long time, check your own personal credit score, as lenders who make startup loans will probably want to see you.
This information will help you get started with obtaining a business loan. It’s a good idea to turn to US Business Funding as the site will help you find the funds you need and has a 95% approval rate.