5 Easy Steps to Get a Business Loan

A Simple Approach to Small Business Loans

Due to very stringent lending standards by banks, it is making it nearly impossible for small businesses to get a traditional loan these days. I've heard it said "they're only giving money to businesses that don't need it" and there may be some truth to that. It still doesn't change the fact that business owners still need small business loans to expand and grow their businesses. 

Many business owners today are turning more and more to online loan companies, often referred to as "alternative lenders". Keep in mind, that even though alternative lending is much easier to get a business loan than a bank, the better prepared you are, the better your loan terms will be.

With that being said, if you do have excellent credit, collateral, and 3-6 months to wait for a business loan, a traditional loan will have a lower interest rate and longer term than an alternative loan. The vast majority of business  owners do not fall into that category and therefore turn to alternative loan companies. In either case, there are 5 simple things that you can do to place your company in a better position when applying.

• What is the purpose of the loan? 

      This is the first question a lender will ask you and your answer can have a negative or positive effect on getting approved, and also the terms of the loan. Put some thought into this and know the specific reason that you are in need of working capital.​

• Determine which type of lender can help you.

         If you have any of these 3 things:  been in business for less than 2 years, have no collateral, a credit score under 700, you will not qualify for traditional lending at a regular bank, do not waste your time. You will have to seek out alternative loan companies for working capital.

• It is not wise to shop around.

          When you apply for a loan, stick with one company. If you go shopping around, putting applications in with several companies, they all start pulling your credit and lowering your score, and as your score drops your terms get worse.  Most companies use the same underwriting formulas to determine your loan terms, and in the end you will end up with several offers that are all very close. By sticking with one company, your credit score will be at it's highest, therefore giving you the best terms possible.

• Know the numbers upfront.

         Find out what your credit score is before you apply, not only will it help you to determine which type of lender to go to, but you will also be asked on the application what your score is. Also know how much your annual revenue is because once again you will be asked on the application.

• Prepare yourself mentally for each type of lender.

         If you have the qualifications, and are applying with a traditional bank, know that you will have to provide a 2-3 year footprint of your personal and business finances. Understand that the process takes 3-6 months to receive funding, and that you will have to put up your personal and business assets as collateral to secure the loan. So many times I hear people talk about how frustrated they are because they did not expect it to be so much paperwork and time consuming, prepare yourself ahead of time.
         If you do not have the qualifications and need to seek out alternative loan companies, know that you will pay higher interest and have daily or weekly payments, monthly payments do not exist. Also understand that these type of small business loans are short term, generally 3-18 months. Often times people get frustrated because they are looking for a long term loan with monthly payments that just don't exist with alternative loan companies, know this in your mind before you apply.

If you've come to the conclusion that you need to get a business loan, and that you need to seek out alternative loan companies, at Small Business Capital US we have over 90 programs available, and a 95% approval rate. Give us a call at 800-681-0834 or simply request a free quote below.

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