How to Get the Best Business Loan
There's a lot of loan options to pick from when securing financing for your business.
Not to worry -- that's what makes us different. We learn about what your needs are and guide you in choosing the best small business loan that's right for you.
Let's go over the process to get the best loan for you.
Figuring Out What You Need
The goal is to figure out why you need funding, how you will use it, and the loan amount you should be seeking.
Step 1: Why do you need a business loan?
It's always a good idea to understand how you will use the financing from a business standpoint. Each type of loan serves specific business purposes.
Here are some reasons businesses choose get a small business loan:
- Growth opportunities
- Gap in accounts receivables vs. payables
- Short-term operational costs
- Emergency repairs
- Equipment purchases
- Material purchases
- Operating expenses
- Hiring new employees, training & education
- Payroll & taxes
- Opening a new location
- Advertising & marketing
- Refinance existing debt
- Store improvements / renovations
- Overcoming unanticipated business expenses
Step 2: Identify how much you need to borrow
Once you've figured out why you need to borrow money, the next step is identifying the loan amount.
We'd all love to get $50 trillion dollars. But the best way to go about it is understanding how much you need to achieve your business goals.
Here's one way to figure that out:
Take your list of reasons from step 1 above. Jot down how much each item would cost. Try to be as realistic with the expenses as possible.
Add them up, and see your loan options.
How to Qualify for a Business Loan
Qualification requirements vary between the different types of business loans. For a term loan, here's what you need to know to secure financing: time in business, your annual revenue, your credit score.
1. How long have you been in business?
For short term loans, you should have been in business for at least 6 months. The time in business is a risk assessment signal for lenders. The longer your business has been operational, the lower the risk for lending companies to provide you funding.
2. What is your annual or monthly revenue?
Your incoming cash flow helps lenders decide the maximum amount of capital you can qualify for. Most lenders require your business to generate at least $120K annually ($10K a month) to qualify for term loans.
3. What is your credit score?
There are loan options available for both good and bad credit scores. Lenders use your credit history to determine the interest rate to offer on your financing. The higher your credit rating, the lower interest rate you will get. To qualify for a term loan, you should have a credit rating of 550 and above.
Prequalify for a Business Loan
