Congratulations on your well-founded idea of starting a business. Perhaps, also, this could be something you’ve long been thinking of. If you’re really keen on getting that business idea off the ground, you now have to proceed with the more challenging part of starting a business: the funding.
You see, even small businesses need at least a bit of funding. Especially when you’re going to start a physical store, you need the capital for your initial inventory and even the store setup. If you don’t have enough saved yet, your recourse would be to apply for a loan for business purposes, aptly called the small business loan.
As your guide, here are three tips you can use so your small business loan application gets approved fast:
Look For Alternative Lenders
If you find it so hard to meet the requirements set forth by banks or other lenders, you may want to consider alternative lenders. There are numerous financial institutions that also offer small business loans, and it’s up to you to search for those options and look for the one that works the best for you.
For instance, there are online lenders with easier application process and less stringent collateral requirements. These are great for those of you who are also just starting out, and don’t have a lot of money, assets, and properties, to constitute your collateral. You just have to be very sure that you’re borrowing money from reputable and trustworthy alternative lenders, like Fastbusinessloans.com.au, so you won’t fall into the trap of money scammers.
Determine If You Qualify For A Small Business Loan
It’s going to be a waste of time taking it easy and believing that you’re immediately entitled to a small business loan when, in fact, you don’t even qualify for one. So, for your application to get approved fast, it follows that you need to start by determining whether or not you, indeed, qualify for the small business loan.
Some lenders have more stringent qualifications than others, but it pays to be aware of some of the factors that can help shape the decision as to whether or not you’ll qualify for a small business loan. Some of these factors include:
- Availability of financial and legal documents. Each lender will have their own financial and legal requirements, but some of the most common ones are:
- Personal and business income tax returns
- Financial projections, if available
- Income statement and balance sheets
- Resume to prove any relevant management or business experience
- Personal and business bank statements.
- Good credit score. This is one of the most important factors that financial institutions look into in order to prove whether or not you’re a trustworthy candidate to be approved of a loan. If your business hasn’t developed credit history yet, the financial institution may also opt to take a look at your personal credit history.
- Business plan. You’re applying for a small business loan, so it follows that when you apply for funding, you’ll already have a thorough and good business plan. It’s not just a business you’ve thought about overnight, but, rather, one you’ve spent so long thinking about. Your business plan should include details, like:
- SWOT (Strengths, Weaknesses, Opportunities, Threats) analysis
- Company description
- Marketing or advertising strategy
- Product or service description
- Current and projected financial descriptions
Secure A Collateral
Many financial institutions, especially banks, will still require you to secure a collateral to support your business loan application. So, before you even begin applying for one, it’s a prudent idea to already have a collateral prepared. Without one, you may be turned down right from the get-go
Your collateral can be any type of asset that you or your business owns. It can be anything-vehicles, real estate, and even expensive machinery or equipment. The whole point of the collateral is to give your lender that assurance that in case of failure to pay, they have property to seize from you so the lender won’t be on the losing end.
When you do pledge a collateral for your small business loan application, be very certain about the risk you’re taking. You should double check your finances to ensure that you can certainly pay for the loan payments so your collateral won’t be seized.
With the tips above, you can finally put to reality those big plans that you have for your small business. Your lack of financial capital shouldn’t be an issue now that you have a higher chance of getting approved for a small business loan. When you do get approved of one, however, remember all the time that a loan is borrowed money. This means that you ought to be certain that your business goes well so you can afford the monthly loan payments. Most importantly, only apply for a loan from a reputable lender or financial institution you can trust.