Immediate Access to Working Capital.
What do you need a business loan for?
The first step of any business loan search is to determine what you need the financing for.
From bank loans, to inventory financing, to merchant cash advances… There are a lot of different types of small business loans on the market. Each loan out there serves a different set of business goals.
Need working capital to finance regular business expenses? A traditional business line of credit could make sense. Need to finance past due invoices? Invoice financing is the perfect loan for your business.
What can you actually afford?
Once you’ve determined why you need the business loan, the next step is to think through how much funding you need—and most importantly, how much small business loan you can realistically afford.
How to Qualify for a Small Business Loan
Believe it or not, your personal credit score is one of the most important parts of the small business loan application. The way lenders see it is that they are lending money to the small business owner, so they want to ensure that you’ve got a strong history of acting wisely when someone has given you “credit.”
The better your credit score, the better your chances of your securing an affordable small business loan.
A great thing to do before you apply for a small business loan is to pull your own credit report and check your credit score. You can do so for free at annualcreditreport.com. (Be wary of any other site that makes you pay!) By pulling your credit report, you now know exactly what lenders will be looking at.
What credit score will you need to qualify for a business loan? Well, it depends on the loan you’re applying to.
Generally speaking, the longer-term and lower-rate small business loans will require the highest credit score. These are products like SBA loans, medium-term loans, and some business lines of credit.
How to Apply for a Business Loan
What financial documents will lenders need for a small business loan application?
Small business loans can have pretty extensive applications, depending on the loan product you are applying for.
Generally speaking, the lower the cost of the loan and the longer the term of the loan, the more paperwork that will be involved.
But no one lender is alike and each will have their own set of requirements. Here’s an idea of some of the most popular documents needed for small business loan applications. Keep in mind—this is only a portion of what many lenders will ask for!