3 Factors to Carefully Consider Before Applying for a Small Business Loan
Whether you’ve recently started your small business or your company needs some additional funding after being in operation for some time, there are several things to consider before you apply for business finance. While starting an online small business with your own funds has become easier than ever these days, many small businesses find that they need a business loan or other line of credit to help with advertising, hiring staff, and more strategies to help their business grow and thrive. However, getting business funding is not always an easy feat for small companies that have not been around for a long time. Here are some of the main things to consider before you apply for a small business loan.
Where to Apply
The bank might be the first place that you think about when the idea of business funding comes up, but the truth is that small businesses do not have a lot of luck with bank business loans these days. Banks often want to see years of experience and profits before they are willing to hand any money over; something that most small businesses new to the market do not have. Instead, check out online resources to find a loan that is more suitable for your business. You will have a better chance at being accepted for the funding you need when applying to a specialist small business lender.
Preparing Your Application
Whether you decide to go for a small business loan or another type of business funding, there are several things that you will need to do when preparing your application to ensure that you are in with the best chance of having it accepted. No matter what kind of funding your business needs, getting your business plan in order and making sure that it is up-to-date is crucial since any lender will usually want to see a copy of it before considering your application. Make sure that all other documents are in order; have an accountant look over everything before you apply to avoid problems further down the line.
Check Your Business Credit Score
Did you know that, just like yourself as an individual, your business also has its own credit score which lenders will check to determine how creditworthy your company is? Your business credit score works slightly differently to your personal credit score, but it is still built on similar foundations and based on your history of making repayments. Even if your business has not borrowed money before, other payments like bills might still be taken into account, so it’s always a good idea to check it. There are several credit agencies that deal with business credit scores including Experian and Equifax. You can access your business credit score online for a small fee or, in some cases, free of charge depending on the service that you use.
Getting your first loan is a big step towards growth for many small companies. However, to be successful in getting the funding that you need, there are certain things that you should consider carefully before applying.