There are a lot of reasons a small business may need a loan. If you have temporary cash-flow issues, it might necessary to get a small loan. It may also be necessary to get a loan when you are looking to expand your business and buy more products or to buy a new building. Whatever your reason for needing a small business loan, you will want to know what a small business loan provider will look at before considering your funding options. There are three main elements of your business situation that will be considered.
1. Business Credit Score
Some small business owners may not realize they have a business credit score to worry about. Some businesses haven't taken out any credit and may not have much of a score to look at. If you don't have much credit or no credit as a business, that doesn't mean you can't be approved for a loan. However, you may need to provide your own social security number to have your personal credit evaluated as part of the small business loan process. While a bad or low personal credit score may have an impact on whether or not you are approved, it may not disqualify you. It will depend on the entirety of your business situation.
2. Company Assets
Another important area that is looked at with a small business loan is your company's assets. If you have a bad credit score but a lot of assets with your company, then you may still be able to qualify for a loan. These assets may have to be put up as collateral, however, which doesn't enhance the risk of getting a loan. A low credit score may also impact the type of interest rate your company gets on your loan. A lot of assets can help you negotiate your loan terms, though, which is a good thing. Banks mostly want to know they can get their money back from the loan, so solid assets make it easier to get a loan.
3. Current or Future Income
A loan provider will also look at past, current, and future finances. This will usually involve your tax returns and other financial records. If your company has a steady income and there is good reason that income will be steady or grow in the future, that may impact how much you are able to borrow. Companies in a steady industry typically can get loans easier, even if they have other financial bad marks on their credit.
If you are ready to take your company to the next level, getting a good loan is a positive step. It's good to know how the process works and what will be considered when you apply for a loan. Having all of your financial records and assets ready to be presented to the financing company will make the process go smoother. Learn more by contacting local small business loan providers.
Share17 July 2020
I always wanted to buy my own home and after saving enough money for a down payment, I decided that it was time. Before I started looking at houses, I talked with a loan officer about financing. I wanted to know how much money I could borrow so I could look at houses in that price range. I was very happy after my meeting at the loan company and I was ready to start house hunting. My name is Jarod Spangler and I'm now a homeowner. If you have the dream of owning your own home, I think you'll find my blog of help to you. I've documented my journey of saving money, securing a loan and purchasing a house. To help you become a homeowner too, I'm offering advice and tips of things that I've learned along the way.
