Financing is one of the crucial aspects of starting a small business. Even the best of ideas have failed to get off the ground because of a lack of financing. But with so many products out there, it can be hard to know what to do or where to go. Here is your five-step guide to attaining a small business loan.
1. Do You Qualify?
Before you can attain a loan, know if you qualify. What is your credit score? Do you make enough to qualify? How will you afford your monthly payments? Knowing the answers to these questions can mean the difference between qualifying and having to try again later.
2. What Type of Loan?
Knowing if you qualify is great, but what kind of loan do you need? Business credit cards, personal loans, SBA loans, and more are all available depending on your needs. Know what type of business loan is right for you before applying.
3. Comparing Lenders
The lenders can also vary greatly between online lenders and banks. Each has its own set of qualifications and benefits. Know what each lender can offer, what their downsides are, and what kind of impact they may have on your business. Moreover, compare them against one another to see which is the best choice.
4. Gathering Documents
When you are ready to apply for a loan, it is time to gather up all of the necessary documentation. You will need personal and business tax returns, bank statements, financial statements for the business, any legal documents, and a complete business plan to obtain financing, especially from a bank.
5. Apply
Now it is time to apply. Look at a couple of similar options based on things such as annual percentage rate and loan terms first. Choose the one with the lowest APR so long as you can handle the regular payments and apply using all of the documentation that you have gathered. If you meet the criteria, you will qualify and have the funding that you need.