You’ve got big plans for your small business this year. But, it’s going to require some “creative financing” to make the dream a reality. The good news is that small business loans are available to help provide the capital. The only issue is that you don’t know much about them, how to get one, and if you even qualify.
The latest NFIB Research Foundation – Small Business Optimism Index is out, and it indicates that small businesses are looking forward to a great 2017. Nearly 12% (up from -7% last quarter) expect the economy to improve, while 31% are currently hiring. Even in the midst of an uncertain future, small businesses are the lifeblood of the economy. It’s a shame that even one small business owner would shy away from the opportunity to expand and continue to provide jobs and solutions over these fears.
That’s why you’ve come to the right place for accurate advice and tips about small business loans. Here’s a rundown of everything you should know before you apply.
HAVE YOUR BUSINESS AND FINANCIAL RECORDS IN ORDER.
At the very least, you will want to make sure you are in good standing in terms of having all your business records and financials up to date. This includes having a current copy of your business plan, your year-to-date profit and loss statements, and your bank account information. You do not have to produce anything else at this time. If you have a non-traditional type of business (heavy on cash sales, for example) be prepared to prove at least 3 months-worth of income.
KNOW YOUR BUSINESS CREDIT SCORE.
It should go without saying, but did you know that many small business owners have no idea what their business credit score is? An interesting Manta study of nearly 3,000 small businesses mentioned on Small Business Trends revealed that 72% of small businesses owners don’t know their actual business credit score and another 60% had no idea where to access this information. It’s important to know this figure so you can negotiate for the best possible interest rates for small business loans.
CHOOSE A COMPANY WITH A LARGE NETWORK OF LENDERS.
When seeking out small business loans, whether it’s your first one or your 100th, it’s important to work with a financial firm that has a good size network of lenders from which to choose a loan product from. You don’t want to get corralled into a small business loan with a small, unknown company, only to find out you could have gotten much better terms elsewhere.
LOOK FOR GOOD RATINGS AND TESTIMONIALS FROM SIMILAR BUSINESSES.
When you are on the hunt for a small business loan, pay attention to the ratings that each company has received. This should be a mix of current and past customers, sharing their experiences of dealing with the company. Look for lenders who are backed by the Small Business Administration. Check the BBB for more insight into the company too.
SHOP AROUND BEFORE SELECTING SMALL BUSINESS LOANS.
Another word to the wise: Never choose the first small business loan offered to you. Let your broker present some loans to you, and advise them that you are shopping around for the time being. Explore at least 3-5 small business loan opportunities before signing on the bottom line. This is a significant investment of your time and resources, so you want to get the best.
PUT YOURSELF IN THE LENDERS’ SHOES.
As you approach different lenders with a small business loan request, try to put yourself on the other side of the desk for a moment. They are there to win your business. But, you also need to be willing to work with them too. Be cordial, share the positives about your business, and if you have any questions – now is the time to ask them.
HAVE A PLAN FOR HOW YOU WILL USE THE FUNDS.
Each lender may have a series of questions to ask during the loan application process. Don’t be alarmed if they ask you how you intend to use the money. While you are not legally obligated to tell them specifics, you will want to frame things in such a way that they can be sure you are using it for business related costs. Talk about how you will expand your current business to serve your clientele better.
CONSIDER ALTERNATIVE FUNDING SOURCES.
If you get denied a small business loan the first time, take heart. Many people do the first few times they ask. Until they get a “Yes”. Try until you have exhausted all your options. Know that there are many alternative funding sources available for small businesses today, such as receivable factoring advances, merchant account cash advances, and bad credit small business loans.
ASK FOR THE RIGHT AMOUNT.
Small business owners may be too modest at times when asking for the funds they need. How much should you ask for? Most experts advise that asking for at least 36 months of support funding should be enough. It’s better to accept more upfront at a lower interest rate than to keep asking for more money at a high rate.
UNDERSTAND THE COMMITMENT OF A SMALL BUSINESS LOAN.
You must understand that a small business loan is a short term commitment that you will need to honor. Learn from any past financial mistakes you’ve made, and make it a goal to pay every payment on time. If you are struggling with cash flow issues, put aside some of the loan funds to cover you for a few months’ worth of payments. This can prevent any late fees and keep you in good standing.
If you have any questions about the small business loan application and acceptance process, you are welcome to get in touch with our expert financial representatives at United Capital Source. We are happy to help you with different types of low interest small business loans and easy repayment terms.