Getting a Business Loan: A Quick Overview on How to Prepare for the Application Process

It’s no secret that business loans are not easy to obtain, especially for smaller businesses with no credit or bad credit. However, there are a variety of options available, and once you decide which solution is right for you, you can start preparing. Getting a business loan can help your business grow, expand, improve marketing efforts, fund new research and product development, etc.

Is your business solvent? Ultimately, lenders make the decision whether or not to lend based on the risk profile and credit history of the borrower. They will analyze factors such as:

• Credit report and score

• Assets in the business

• Any outstanding loans and cash flow

• Your investors

• Years in business

• Financial statements

If you are just starting out or your business does not have the best credit history, it will be more difficult to obtain a loan. You will most likely have to put up some collateral and have to deal with higher interest rates. This is also one of the reasons you have to submit a list of your assets for lenders to review, so they know what to look for if you end up defaulting on the loan.

Financial review when getting a business loan

Your cash flow and outstanding loans will be reviewed to determine if you will actually be able to repay the current loans you are already obligated to repay AND any new loans you may be given (plus interest).

You will need to determine for yourself how much money you will need to apply for and why. Every dollar you ask for must be justified. As mentioned above, there are a variety of reasons businesses are interested in taking out a business loan, whether it’s to manage day-to-day expenses or to invest in new equipment. You don’t want to just “estimate” how much you’ll need, or you could end up with more debt than necessary or less money than you really need. It will take some time to figure everything out based on detailed cost projections and how much you can afford in monthly payments plus interest.

If you haven’t in a while, be sure to check your credit. If your business is already established and you’ve borrowed money before, you’ll have a business credit score. If you haven’t been in business long, check your own personal credit score, as lenders who make loans to startups will probably want to see it.

This information will help you get started on a business loan. It’s a good idea to visit US Business Funding, as the site will help you find the financing you need and has a 95% approval rate.