Step-by-Step Prep for Small Business Loans
While the application process for receiving a small business loan is quite straightforward, there are a few steps to take before completing your application. In order to ensure your request for financial assistance is accepted by a lender, consider doing the following.
There are several different lending avenues to venture while looking for the right funding for your small business. It is important to consider the specific needs of your business and what will work best to fill those needs before deciding on an option.
Traditional Bank Loans: Up until recently, bank loans were a popular choice for small businesses looking for additional funds. Traditional loans are still a reliable option for many businesses today, however, the application process is often more complicated and time-consuming, creating a lengthy process compared to less mainstream lending options. Additionally, traditional loans are often difficult for small businesses to obtain because banks are not in the business of high-risk lending.
Line of Credit: A line of credit is also a viable option for small businesses. However, a line of credit is similar to a traditional loan in that they require the applicant to provide detailed documentation and a solid credit history. For small businesses, especially those just starting out, providing this kind of history is difficult and takes time.
Private Lenders: A variety of options fall under this category, because of this, it is important to pick a reputable company. Not just that, but a company that is flexible, affordable, and addresses your specific needs efficiently. Factoring companies, such as Express Business Funding (EBF), fulfill all of these requirements for small businesses. The application process for factoring is quick and straightforward, with minimal fees, and funds are typically released upon application within 24 hours.
There are so many options out there. If you simply spend the time doing your research, you’ll find the right one for your small business.
After you have researched potential lenders, it’s important to also “research” your own business. Analyze your assets and your credit score. Would you lend to yourself? If you have a solid financial track record and healthy assets, such as good investments and a strong cashflow, then you should have no problem receiving a lone from any institution.
There is always a list of requirements and documentation that must be provided when you decide to lend funds for your small business. This compilation of information varies based on the lender you choose.
The list of requirements and documents necessary for traditional loans and lines of credit is lengthy. However, private lenders and alternative finance companies, such as EBF, approve applications based on the strength of a business’s account receivables instead of credit history. Unlike a bank, finance companies often have less strict requirements so that new businesses, as well as those with poor credit scores, can receive the loan they need.
The last step in the process of obtaining your small business loan is to make an application to a lender that best suits your business needs. Acquiring the above information before applying, makes the process smooth and comprehensive.
The most crucial part of following these steps is knowing that you are choosing the right lender for your business. Likewise, finding out whether or not you are eligible for a particular loan in the first place is imperative, otherwise the process begins all over again and you’ve wasted your time. And after all, time is money.
Express Business Funding