A small business loan can open up new opportunities for any company. However, lenders are choosy, so to boost your business’s chances of getting a loan, try following these tips.
Tip 1: Keep Your Credit Healthy
Lenders will scrutinize your business’s credit history. To keep your credit in good shape, prioritize making all of your payments on time and maintaining a good debt-to-credit ratio. Also, obtain a copy of your business’s credit report. If you notice any errors, having them corrected can provide a quick boost to your company’s credit score.
Tip 2: Determine Why You Need a Loan
Carefully consider why you need financing. That will in turn determine which type of small business loan you apply for—or even if a loan is a right choice at all. As pointed out by Business News Daily’s Adam Uzialko, it may not make sense to enter a time-intensive application process—like that for an SBA loan—when a quicker option like a line of credit would better fit your needs.
Also, keep your business’s age in mind. For example, if your business is young and looking for funding help to get through its early days, you may have trouble obtaining loans from traditional lenders. However, microloans from nonprofits or financing from alternative lenders can be a more viable option.
Tip 3: Have Your Documents in Order
Every small business loan application requires documents. The specific requirements will vary depending on the lender, but in general, you’ll want to gather your business’s legal documents as well as your personal and business tax returns, financial statements, and bank statements.
Tip 4: Be Choosy
It may be tempting to go with the first attractive small business loan you qualify for, but it pays to be choosy. Compare at least two or three different options. Typically, you’ll want to pick the option with the lowest APR—as long as you can comfortably make its monthly payments.
Want to begin discussing specific financing options? At Ambition Funding Solutions, we’re ready and excited to hear from you, so get in touch today.