Small business loans don’t have to be as complicated as some people anticipate. Whether you’re starting a small business or running an existing one, securing financing is a major factor, especially for businesses that are attempting to grow.
Small business owners are increasingly seeking reliable sources of funding that match their fast pace and are willing to extend capital to newer ventures that exhibit great potential.
Courtesy of the Small Business Administration (SBA), here are a few simple tips on how to go about preparing to apply for a small business loan. Thanks, SBA!
The first few steps are simple. The SBA will want to learn more about you and your personal background. This will include things such as a criminal background check and your educational background. Some lenders will even want a resumé to outline your business experience. After that, they’ll want to look at your business plan.
All of these steps ensure that you’re a responsible and intelligent applicant.
The next thing the SBA will take into account is your credit history. They’ll want to view your personal credit report and business credit report. Your income tax returns, financial statements, and bank statements will also be reviewed.
After your credit history and financial statements are reviewed, the SBA will need to look into your collateral. Though some loan programs don’t require these precautions, a loan is more likely to need collateral backing depending on the level of risk the lender associates with a business.
What to Do If Your Loan Application is Rejected
A loan rejection doesn’t mean that your small business dreams are over. There are a number of reasons why your application could’ve been rejected. If you receive a loan rejection, the first step is identifying what specific aspects of your profile and credit history weren’t favorable to your chosen lender.
Double check that you included all of the relevant information for your business in the application, as well as all of the financial data that your lender has asked for. It’s possible you’ve been turned down due to a simple error or typo.
Small business loans don’t have to be stressful. Once you understand the necessary qualifications, you can apply for your small business loan. If your application is rejected, it’s not the end of the road. You can review your loan application or apply to different lenders.
To learn more about traditional bank loans, small business loan guides and other types of financing for small businesses, download your copy of our Small Business Loan Guide to Business Financing in 2015 and find out which financing option is best for you.