How to Get a Business Loan
- February 9, 2021
- Written by : REIL Capital
Businesses seek funding for a variety of reasons. Depending on their stage of growth, one loan may be a better fit than another. Stages of growth include starting, growing, maintaining, and renewal.
A business that is just starting may need access to funding to perform target market research, develop prototypes for products, or others. In the growth stage, a business might source working capital for shipping and production, marketing, or inventory maintenance. Maintaining a business may require invoice or equipment financing. The renewal stage is a mix of all of the above.
The best advice we can provide to business owners when it comes to loans is: to understand what stage of business you are in and exactly why you need funding.
How to Get a Small Business Loan
First, you must decide on a lender. Differences in lenders range from their acceptance rate, customer service, interest rates, term lengths, and more. Determine what kind of pricing you are comfortable with, what kind of people you’d like to work with, and what kind of qualifications you have.
Next, find your best-fit funding option. As we mentioned above, every business is different and has different needs. Financial advisors are usually happy to discuss what loan option is the best for your business. If you need financial advice, we have a team of specialists ready to help.
The last step to getting a small business loan is meeting the qualifications and requirements provided by your chosen lender. Our qualifications typically include:
- A minimum annual revenue
- 3+ years in business
- 650+ credit score
- 145+ business score
- No bankruptcies, outstanding liens, or judgments
Our requirements are usually:
- Accurately completed loan application
- 3 months of business bank statements
- 3 years of business tax returns
- Business profit and loss statements
- Business balance sheet
With the above qualifications and requirements checked off of your list, you will be knocking on the door to funding.
How to Apply for a Small Business Loan
To begin, our recommendation is to drum up a solid financial plan. Your financial plan should explain exactly how your new funds will be allocated. Not only will this help you, the owner, see the bigger picture, it also shows your lender that you are responsible and knowledgeable when it comes to money management.
Next, we recommend for business owners ensure they meet the above qualifications and requirements prior to applying. Keep in mind that some lenders are more lenient than others. Here at REIL Capital, our goal is to help you succeed no matter your stage in business.
Having met these requirements and created a financial plan, you can apply for a small business loan.
When applying, you will complete a business financing application that includes your business name, requested funding amount, the purpose of the request, and more. Once you’ve completed our application, we will respond immediately with actions to take.
How to Get a Startup Business Loan
If you are a business just starting out, a startup business loan may be a great option for you to explore. To get a startup business loan, you will first need to determine your business’s needs. Ask yourself why you are seeking funding:
- Is it to pay for necessary equipment?
- Is it to have a feeling of security with access to continual working capital?
- Is it to pay your employees when you are waiting on an invoice payment to come through?
Next, consider the qualifications. With probably less than one year of operating as a business, it can be difficult to prove yourself to lenders. Many business owners are not aware of the fact that lenders look at personal credit scores when considering lending for your business. Keep in mind, however, that lenders may expect your personal credit score to be higher than 650-680 for consideration. This is extremely common with startup business loans. Consider a startup business loan if you are in the starting stage of business growth, if you have already tried crowdfunding, or if a lender recommends this option.
How Do Business Loans Work?
A business owner may choose their lender and then complete said lender’s application. After completion, payment terms will be presented to the business owner. Payment terms include repayment expectations, interest rates, term lengths, and any other fees associated with the loan. It is up to the business owner to use the provided funding, and continuously repay the expected amount, plus interest, to the lender.
How many business days after you submit your application will you receive a loan estimate form?
We like to provide business owners with a loan estimate within 24 hours. In addition, funding may be provided between 24 hours and one week with rare occasions extending to about one month.
How to get a business loan with bad credit?
Although most lenders have specific requirements and qualifications, there are ways to increase your chances of being accepted. We recommend for businesses to prepare a thorough financial plan, provide collateral, and improve their personal credit scores prior to applying.
How to apply for small business loans under the coronavirus stimulus bill?
You could be eligible for a Paycheck Protection Program or an SBA Disaster Loan (Economic Injury loan). Typically businesses with 500 or fewer employees are eligible, but this does not guarantee acceptance. The U.S. Small Business Administration is enabled by the government to provide $8 million in funding to various companies. All loans are insured through banks, credit unions, and lenders who are pre-approved.
A commonly used application is the first step in applying.
If you’d like to take the next step in your business and acquire funding through business loans, we’d love to help. Please visit our site to get a business loan that will support your business the best.