Going for a business loan may seem simple at the outset, but it really is a big decision. You do need money for your business, but at the same time, you want to make sure that you make the best decision for your own financial situation.
If you take the time to learn about the loans available to you, you can be much better prepared when the time comes to go for one. However, regardless of the loan you choose, you will still have to make some preparations before you apply.
Getting your finances in order is the first thing to do. And it’s a lot easier than you may think. Many sites have a checklist you can use to ensure you have gathered all of the information you need for a complete application.
There are several types of loans out there, including short-term loans, those from angel investors and even business grants. Understanding the differences between them can make a big difference. For example, each loan type will differ in its application process as well as its terms and conditions. And although all of this information may be difficult to gather for each loan, it is worth it if you wish to make an informed decision.
Online or Off?
These days, you can avoid the long lines at the bank by going online to apply. But is this the best decision for you? The answer will depend on what you’re looking for.
Many people prefer the option that offline lending provides to speak face to face with a real person. And a bank in your neighbourhood can mean that you may be able to speak with others you know about their own experiences.
On the other hand, choosing to apply for a loan online also has many benefits. You can end up receiving your money sooner as well as apply for a loan through several lenders with a single application.
You will also have to consider how quickly any loan process will take from application to completion. Some types of loans may take months to arrive. If time is a factor, then going online may be your fastest option, as many of these sources can get you your loan in days, even though you may pay a little bit more for the privilege.
Qualifying for a bank loan may require that you already have sound cash flow, as well as a high credit score and proven profitability. It’s also a good idea to consider the possibility that getting a loan from a bank will offer you the lowest cost for your capital.
What Lenders Want to Know
Any lender will want answers to particular questions they’ll have about you. For instance, they’ll want to know about your credit score. You can answer them by requesting your score before applying. Another question they’ll have is why you want a loan. This is because not all lenders will loan money for the same reasons. Therefore, being as specific and honest as possible will only benefit you.
How much money you need will be another question asked by lenders. The amount any lender will be willing to consider will be based on your annual revenue. Therefore, this is another number that you will need to provide them with. Most lenders will not loan any more than 8 to 12 percent of the annual revenue amount.
Once you’ve completed your checklist, you will need to ensure that before handing in your application, you have not made any mistakes. You can even contact your desired lender/s and ask them questions of certain things aren’t clear. The more thorough you can be on your application, the better your chances of getting the business loan you’re after.
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