It’s no secret that loans for businesses aren’t easy to get – especially for smaller ones with either no credit or poor credit. There are a variety of options available, however, and once you decide which solution is right for you, you can begin preparing. Getting a business loan can help your company grow, expand, enhance marketing efforts, fund new research and development on products, etc.
Is your business creditworthy? Lenders ultimately make the call on whether or not to make a loan based on the borrower’s risk profile and credit history. They will look at factors such as:
• Credit report and score
• Assets in the business
• Any outstanding loans and cash flow
• Your investors
• Years spent in business
• Financial statements
If you’re just starting out, or your business doesn’t have the best credit history, it’s going to be more difficult to get a loan. You will most likely have to put up something for collateral, and have to deal with higher interest rates. This is also one of the reasons why you have to present a list of your assets for the lenders to review, so that they’ll know what to go after if you end up defaulting on the loan.
Financial Review When Getting a Business Loan
Your cash flow and outstanding loans will be reviewed in order to determine if you really will be able to pay current loans that you’re already obligated to pay AND any new loan they might give you (plus interest).
You yourself will need to determine how much money you will need to request and why. Every dollar you ask for must be justified. As mentioned above, there are a variety of reasons why companies are interested in getting a business loan, whether it’s to manage daily expenses or to invest in new equipment. You do not want to just “guesstimate” how much you’ll need, or you could wind up with more debt than what is necessary or less money than you actually need. It’s going to take some time to calculate everything based on detailed cost projections, and the amount you can afford in monthly payments plus interest.
If you haven’t done so in a while, be sure and check your credit. If your business is already established and you have borrowed money before, you will have a business credit score. If you haven’t been in business for very long, check out your own personal credit score, since lenders giving loans to start-ups will probably want to see it.
This information will help you get started with getting a business loan. It’s a good idea to go through US Business Funding, as the site will help you find the funding you need and has a 95% approval rate.
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