How Hard is it to Get a Loan?
Getting a loan is a major hurdle for small businesses, mainly because of banks’ strict lending standards. Yet securing external funding is often necessary to start or grow a business or meet daily expenses, including payroll and stock. Though identifying, applying for and receiving authorization for small business loans can be challenging, it usually proves to be worth the extra effort.
Your justification for the need for the loan will determine the type of loan you can get with a small business. If you’re starting a business, getting a loan in the first year of operations is virtually impossible. Lenders require cash flow to help loan repayment, and companies are typically excluded from financing instantly. Due to this, many people have to focus on business credit cards and borrow from family.
Where to Get Small Business Loans
There are several locations where you can get small business loans, including banks, non-profit microlenders, and digital lenders. Such banks offer products that include mortgage loans, credit lines, and receivable lending accounts.
With competitive rates and highly efficient loans processes, Thinking Capital continues to meet the small business loan needs of many organizations. Small businesses from different industries attest to its quality service and transparency.
Why Your Business Needs a Loan
A small business owner may know the reason and sum of the business loan they require. This is not necessarily true if the company is a start-up. Start-up holders can only be in the process of determining how many resources they need and when.
If your company is a start-up, your personal credit background and your business credit history will be analyzed. Take some time to get your personal credit history in order before you try to qualify for a small business loan. Ask each of the main credit reporting agencies for your credit report. It helps to study these documents thoroughly.
Factors to Consider Before Applying for a Loan
You have to have a good business plan to get a small business loan from just about every lender. However, until you have a good business plan, you’re not even going to know how much money you need or how easily you will fund it.
Most business owners have been misled by popular culture that a lot of money can fix all their issues. Asking for as much funding as you can get may lead a prospective lender to believe that you have not really thought out the purpose of your loan. You need to be certain on the intent of your loan.
Many businesses applying for loans cannot afford the flexibility of time to wait for the acceptance of a loan which can take several weeks. Consider how long you are willing to wait for a loan application to be accepted. Some loan providers are quicker than others. A good understanding of your options can help a lot.
Lenders can review both your personal and business’ credit history. Ask for your personal credit reports before applying for a loan and try to clean up any errors. If your credit can use some work, you may want to wait until you’ve improved it to apply for a business loan.