What You Need When Applying for a Small Business Loan
Small business loans are most often used for short-term financial expenses, such as building your inventory or covering accrued taxes. You can even use it to cover payroll. Sometimes, you can even get the loan to cover a disaster. If you’ve decided to go for a small business loan, here are some things to keep in mind before you do.
1. Check your credit history.
The credit history is one of the big things that lenders will look at. You’re going to need a credit report for them (and, it’s not bad to know your credit score for yourself). Get a copy of your credit report from three major reporting agencies. Check to see if those reports have any mistakes. You need to be informed.
2. Your company.
You’re invested in your business. You’re passionate. Now, prove it. Go into the meeting with business and personal financial statements, accounts receivable and accounts payable, working capital, a loan request, your business plan, any reference letters, tax returns and anything else that will help the lender make a decision. It helps to show that you have a plan, you know what you’re doing, and you’re in it for the long haul. Being unprepared and disorganized never works in your favor.
In this market, you may need collateral. Does this mean your house? It might. If you can’t afford to put up your house as collateral for your business (you should probably keep business separate), then you need to take stock of any other assets your company may have. If your company doesn’t have the assets, you may have to use your own. Keep that in mind.
Before you get out there, do some research to make sure a small business loan is what you need. Interest rates may be higher for a small business loan. The money doesn’t necessarily come all at once. There are some fees involved. While a small business loan can be a great way to quickly cover some costs, there are other ways to raise the equity.
Have you ever applied for a small business loan? What do you wish you know before you started the process?
Posted on April 18, 2013, in Biz Tips, Entrepreneur, Small Business and tagged business, economy, equity, financial expenses, loan, personal financial statements, reference letters, small business, small business loan, small business loans. Bookmark the permalink. Leave a comment.