How to Apply for a Small Business Loan: Tips to Help You Increase Your Chances of Getting Approved2 min read
In order to get your business off the ground, or to continue operating, you must be able to obtain the financing you need. It’s not easy to get that money – especially if you lack business experience and don’t have a very good credit score. There are things you can do to increase your chances of getting approved. Here are a few tips on how to apply for a small business loan:
• Write a detailed business plan that explains why exactly you need the funding, how you’re planning to spend the money, and what you are going to do in order to pay it back. The last part is especially important, as you must demonstrate that you will be capable of gaining profits, and that through those profits you’ll be able to repay the lender with interest.
• Research the different types of loans and determine which would be the best one for you to send the application to. The SBA loans are backed by the US Small Business Administration, but they typically have strict eligibility requirements. There are term loans that are offered by financial institutions such as credit unions and banks, and can range from short-term to long-term solutions. Other options include lines of credit, merchant cash advance, microloans, crowdfunding, etc.
• At some point when you learn how to apply for a small business loan you should take the time to review your credit history and score. If your business has been around for less than three years, you probably won’t have much of a business credit history. You might have to use your personal credit history, and if it isn’t very good, you might have some problems getting approved. Review the credit reports and consider working with a credit repair agency that will help you remove any potential errors and clear some issues up.
More Tips About How to Apply for a Small Business Loan
• Compare different offers and terms. Pick at least 3 lenders that seem to offer the ideal terms and conditions for you. If you don’t take the time to review multiple options, you might miss out on a lower interest rate. Don’t apply for TOO many loans, however, since it could hurt your credit score.
• Read reviews about each lender you are considering to see what other businesses of similar size of yours are saying about them. Which lender seems to have a good rating with companies in your industry? Which ones are in solid financial standing?
Now that you know how to apply for a small business loan, start getting all of your credit info and reports ready, and create a good business plan. Start with a company like US Business Funding, which has an A+ rating with the BBB.