Some months ago, I heard some group of people discussing that to get loan for their business is now tough due to some criteria you must get before getting it and is not something that they disclose to everyone and thereby making them not to get the loan approved if you apply for that.
So that is why I brought it to the notice of many people those criteria that the lenders needed for your loan to be approved and approved fast. Getting the small business loan is very simple and fast when you are prepared for it, and being prepared is by reading & knowing the criteria.
Below are some of the most important criteria to get the small business loan.
- Improving Your Personal And Business Credit Scores:
Wow! Your main personal credit score is better when it ranges from let’s say 300 to 900 and it is the best way that gives you ability to pay back your debts such as some mortgages, credit cards and car loan that piled up for you.
The criteria that small business requires is a personal credit score for your applications because they want to see how you manage your debt.
Another thing is paying all your bills on time, it will help to build your credit score. Even at that, if you pay your bill correctly, credit report errors could curse you damages to your score.
Moreover, some of the businesses that have been established and want to apply for bank loans can cross check the credit score of their business which normally ranges from 0 to 100 at different business bureaus credit, but when checking it and you find any mistakes on your credit reports, just notify the bureaus to fix up the mistakes.
Seriously speaking, your business credit score and your personal credit score have to be extremely good before you will be qualify for business loan from banks, though it depends on the lender and the business factors like your revenue, cash flow and time in business.
But in all, online borrowers checks your personal credit score because it can be a little bit lenient when it comes to credit score requirements, as they pays more attention on your business cash flow and the track record.
- Find Out The Lowest Qualification Required By The Lenders:
Getting at least all the lowest qualifications and requirements that lenders may be needed will make you substantial applicant. In other sense, some borrowers can give their money out if you are doing well great in some parts and maybe not performing well in some part of your business, but to be sure of approval is reaching their minimum requirements and qualifications.
Normally, some of the borrowers supposed to reach at least the minimum criteria in respect to the credit scores and annual revenue in business, and some of the lenders are not comfortable the way recent failure and some of the misdeeds in the past.
For you to qualify for online lenders can be simple for you only when the lenders approve loans based on the traditional factors like credit scores, cash flow and annual revenue, that type of loans goes with less demands in requirement. For instance, online lenders can qualify you even when you don’t have good credit score or business that is established, the lenders can be compassionate with the borrowers based on the recent failure in business.
- Get All The Financial And Legal Document Needed:
Some of the common documents that all the lenders like banks and other traditional lenders usually asked for during the application process are
- Your business licenses
- A scanned copy of your driver’s license
- Your personal and business income tax flow
- Balance sheet and income statements
- Your personal and business bank statements
- Your commercial leases
- Articles of incorporation
- A resume that shows important management or business experience
- Your financial projections if in any way you experienced limited operating history
The above requirement can help you to get loans from bank with stress free and less time. But the above mentioned cannot be a problem if you are in the market for loan is a long term business loan to finance your major investment.
Though in all, if you need the money so fast for your business, an online lender may be of better suggestions because they can process it with lesser documentation requirements and make it faster than others.
- Develop A Strong Business Plan
Before a lender lends you money, he or she may be strongly convinced that you will be able to pay back the money. Some may request to see your business plans that have the details on how the money may be used and how it will increase your profits.
The business plan which you will present to them will contain the present and projected financials, and show clearly that your business is capable of making enough income that will cover all the expenses and also repay the loan, with all these, your lender can have enough confidence in your business thereby convincing them to approve loan for you.
Some of the things that a lender may see in your business plan include:
- Company description like name of the company, date of existence, location etc
- Product and service description
- Management team
- Industry analysis
- Facility and operational plan
- Promotional, marketing and sales strategy
- Strength, weakness, opportunities, threats (SWOT)
- Grant A Collateral
Before you get qualified for a small business loan, you must provide valued assets to support the loan. The collateral include (but not limited to): equipments, real estate, or inventory that the lender can held and get sold if you are unable to make repayments. It’s just a simple way for the lender to recover some if not all the money, if your businesses collapse.
SME/SMB needs approximate value for collateral just for security purpose.
Some online lenders do not need any valued assets but in other way may like you to provide a personal guarantee.
In conclusion, just try and make sure you cover and get all the criteria needed for loan so that your SME/SMB loan will be approved very fast and manage the loan very wise to get to your dreams.