Your small business is ready to grow and you need a loan to make it happen. Just like with a personal loan or a mortgage, you will want to shop around and find the best rate and terms to meet your needs. Being prepared will be key to expediting the process. Follow these four basic steps and watch load offers roll in.
1. Improve your personal and business credit scores.
Surely you already know how to check your personal credit score and that reviewing it for errors once a year is a solid plan for keeping your score high, but did you know that you can also check your business credit score too? The three leading sources are: Experian, Equifax, and Dun & Bradstreet. Qualifying for a small business loan will be much easier if both personal and business credit scores are high.
2. Gather financial and legal documents.
While not all online lenders require submitting tons of supporting documents it is still a good sound business practice to have them ready and available. Key documents are:
- Personal and business income tax returns
- Balance sheet and income statement
- Personal and business bank statements
- Commercial leases
- Business licenses
- Articles of incorporation
- Franchise agreement
- Financial projections if you have a limited operating history
3. Formulate a strong business plan.
Presumably this is something you already have ready to go. Lenders want to know what you are going to use the money for and how you plan to pay the loan back. Give them the warm fuzzy by presenting this plan in a well articulated package to include:
- Current and projected financials
- Company description
- Product and/or service description
- Management team
- Industry analysis
- Facilities and operations plan
- Promotional, marketing and sales strategy
- SWOT analysis (strengths, weaknesses, opportunities, threats)
4. Inventory your collateral.
Each lender will have different requirements when it comes to collateral. If you default on a loan they need to know there is something tangible for them to recoup. Prepare a list of your assets: equipment, real estate, and/or inventory. If you are lacking the necessary collateral to give lenders the reassurance they require then you will want to look into an SBA 7(a) loan. Read more about what it takes to qualify for an SBA loan on their website www.sba.gov. If an SBA 7(a) loan is the right match for you and your loan amount is going to exceed $250,000 you will need to submit a valuation. Visit GoQuantive.com/sba to learn more.
What are you waiting for? Proper planning and a little research into the options available to you and your business will pave the way to a much smoother loan process for this much needed growth capital investment.