What to Know Before Applying For a Business Loan
As an established small business owner, you probably have your system down pat. But maybe you’re getting to the point where you’re ready for some new challenges. You see an opportunity to grow your business but are unsure how to take that next step without jeopardizing your careful cash flow balance. If a small business loan has crossed your mind, here are a few things to know and do before applying.
Evaluate your business like the lender will
While traditional measurements like credit score may be important to some lenders, it’s not the only factor they will consider (and sometimes this isn’t even looked at).
- How long have you been in business?
- How well have you maintained your business over the years?
- Do you have a good financial history?
- How well have you handled any debt the business has taken on?
- What’s your revenue? Is it steadily more than the debt you’re considering? Will you be able to pay the loan back?
Answer these questions and try to decide if you would loan yourself money based on the facts. Get a copy of your credit report and make sure there aren’t any glaring mistakes that could negatively affect your chances of being approved.
Pro-Con List FTW
Does taking out a loan really make sense for you to grow your business? You probably have plenty of reasons why you need the money, and if it’s very obvious on paper that your revenue will increase because of the extra temporary funds, then you’re definitely ready. If however, you’re a little uncertain, take the time to sit down with a calculator and consider the cost of the loan as well as the opportunity cost of what the business will lose out on if you don’t take the loan.
The lender is taking a risk by giving you a loan, so be aware that they will want to see the benefit of giving your business the money before approving it.
Loans + Internet = Faster Loans
Obtaining a small business loan has become far simpler and quicker with the emersion of alternative and online lenders, and if you have all your paperwork ready to go, you can be approved and funded very quickly.
Feel free to ask the lender what their specific requirements are before you apply, or before you even need a loan, so you can enjoy a smooth process. Especially for ongoing financing such as a line of credit, it’s better to apply when you’re not in dire need of financing, so you have the money when you need it. Not to mention this is a great way to build your business credit history.
If you’re ready to take the next step with your small or medium sized business, don’t miss out on the opportunity because of a lack of funding! Get in touch with WCM today and we’ll see if we can do business! Or fill out our simple application to see if you qualify.