If you’re contemplating applying for additional financing for your business, congratulations! It never hurts to have extra cash on hand, so it’s understandable if you’re eager to receive a loan. With a small business loan, you’ll be able to invest in the future of your company.
In this post, we’ll detail eight ways to make your small business loan application process simple and efficient. Before you know it, you’ll have financing in your business bank account, ready for whatever your needs may be.
1. Research lenders
Before you submit an application, examine alternative lenders. Many factors can vary from lender to lender so be sure to compare each the differences between each application process, requirements, and product options. These details will help you decide which lender is the right fit for your small business.
2. If you’re a new business, consider waiting to apply for a loan
If you’re just starting your business, you might want a business loan in order to get it up-and-running. Unfortunately, many lenders don’t provide financing to newly opened business, as they require the business be operational for at least a few months.
If you’re serious about receiving a business loan, focus on making as many sales as possible. This way, when you meet the lender’s time-in-business requirement, you’ll be able to show off your bank statements, showing them that your business can handle making working capital payments.
3. Know your business credit score
Before giving you a small business loan, it is likely that the lender you’re working with will need to run your credit. Still, you should be aware of your score when submitting your application. This will help the lender determine if you qualify for their financing options or not from the get-go.
4. Have monthly finances on-hand
Another thing you should be aware of when applying for financing: your monthly bank or credit card statements. This is a factor that many lenders review when deciding if an applicant qualifies for their small business loans. Your statements will show lenders how much money your business is generating which helps them determine and qualify you for the right amount of financing.
Recommended Reading: 3 Essential Bookkeeping Reports That Make for One Financially-Savvy Business Owner
5. Be up-front about existing debt
We know this isn’t the most enjoyable topic, but it is important to be transparent about your unpaid debt when you’re applying for additional financing. Although having any debts you are still paying off isn’t necessarily a deterrent for working capital lenders, it could influence your loan amount.
A responsible lender will want to ensure that you’re able to handle the repayment process, while still being able to pay off your existing financial commitments.
6. Consider your financing needs
Are you looking for working capital for an upcoming project? Or do you need cash for routine updates throughout the year? The length of time that you’ll be utilizing your loan might affect the product, amount and pay back term that the lender recommends for you. Be specific with them about your business budgets and plans and how you’ll use the financing; this can help the lender make sure you’re getting exactly what your business needs.
7. Be available and willing to help your lender
Throughout your application process, make sure that you promptly respond to any of the lender’s questions. If you complete your application accurately, and are quick to provide the lender with any other information, you’ll likely receive your financing sooner. After completing the application, you might need to submit references or other additional documents, so be sure to be punctual with those as well.
8. Be realistic about the application process
Naturally, you want access to your financing as soon as possible. But remember, the lender can’t wire it to your bank account until they have all of the information that they need. Be patient, and as we mentioned before, be easy to work with—this will make it a stress-free experience for both you and the lender.
Recommended Reading: The Small Business Owner’s 3 Steps to Being a Better Borrower
Making plans for and getting started with a small business loan
Now that you’ve read these eight small business loan application tips, it’s time to get started. Receiving financing from a lender can be a valuable way to pay for big projects, purchase new equipment, expand your operations, or run a variety of initiatives based on your industry. However you choose to use your business loan, it will give you peace-of-mind to know that you have extra money for any challenges that come your way.
Be smarter with business loans by learning more about your finances
Start with a better understanding of these 108 accounting terms that can mean the difference between success and failure for business owners and CEOs: