How soon Can I Apply?
4 Months ago, I was thinking to apply for business loan but getting little scared after reading some negative articles on web. And this is the first time I am applying for a loan so I don’t want to take any risk regarding my business. I have decided to take a deep researches before taking any final decision.
I started to go through on different banks and side by side reached out through e-mail as well as calls to sort out all my queries and collecting more information.
After a month research finally I have applied for a small business loan and decided to share that main points on my blog for others. If you are looking for small business loans then I would like to recommend to read out all these steps before taking any final decision. Hope you will get satisfied and feel free to share your thoughts & questions below in the comment box.
Getting a Small Business Loan
Liquidity is very important to run the day to day affairs of a business and also for conducting businesses. Small businesses often need a line of credit or small loan from financial institutions or banks. A business that has a healthy balance sheet and a good credit score find it easier to get loans from financial institutions.
The following are some tips to get a small business loan:-
Credit Score Rating
• Make sure the credit scores associated with the business are good. This means that the credit scores of the business and the business owner both need to be monitored. Good credit scores will make it much easier to obtain a business loan than not having good scores.
Secured Business Loan
• Provide collateral for the small business loan. Providing a good collateral package will make it less risky to lend to your business for lenders and will reduce interest rates for the business loan.
Strong Guarantee Period
• Similarly it is also a good idea to provide personal guarantees to lending institutions for the business loans. This means that if the business owner has a strong creditworthiness, attaching a personal guarantee to the business’s loan will make granting the loan less risky for the lender.
Analyze Bank Statement Before you Apply
• Sometimes the financial statements of the business can have many red flags in them. When the lender assesses these statements the red flags make it difficult to grant a loan for the business. Ask a professional expert to analyze your bank statements before submitting them to the lender. Getting rid of mistakes and unnecessary red flags will make getting a loan much easier.
Pre-Planned to Repay the Bank Loan
• When a business gets a loan from the bank or financial institutions then it is the duty of the business to repay the bank loan on time. For a proposal of the bank loan the business must have a strong repayment plan for the loan. This depends on future projected earnings of the business. Also including a contingency plan for repayment of the bank loan is a good idea.
Do not go to beyond your Budget
• Do not borrow more than you need. Analyze exactly how much you need as a smaller business loan is better than a larger business loan which is difficult to repay. Also have a correct analysis of the business prospects in the future in the industry that it operates in. Be sure the small business loan will be paid back on time before applying for the loan. Another way to borrow small amounts of cash for the business is by getting a business credit card for the business.