Small business entrepreneurs come across several challenges one of which is the lack of much-needed capital to grow. Getting a business loan is essential for the business to cover its expenses and grow. The different types of business loans include small business loans, merchant cash advance, and lines of credit among others. The right business loan is the one that meets the unique needs of a business.
Steps to take when taking a business loan
Many small businesses have to go through a lengthy application process before they can access the cash. The process is not always straightforward. However, with a little bit of planning and proper-preplanning, it is possible to make the process a little easier.
Pre-application of the loan
Before picking a business loan, it is essential that you asses your business needs. You should determine if you really need a loan at your current phase of business growth. Sometimes a loan is not the best option. Other types of financing such as equity, invoice financing, and credit cards could be more favorable. Look at your business goals and determine if getting a loan will actually help you attain the goals. Once you have settled on a loan, start by looking for different loan products and assess your creditworthiness.
Your creditworthiness is the most important thing that the lenders will check when considering your loan application. It determines whether you will get a loan and the terms of the loan. Lenders need to make sure that their money is safe and will only lend money if they perceive a low risk of default. If your credit score is good, you will have several options from which you can choose. Several lenders will also be willing to give you a loan, the terms of the loan will be flexible, and the interest rates might not be high.
Start by obtaining your credit report and going through your credit history. Check the report for possible errors and omissions that may affect the credit score. If you find any errors, report them as soon as possible. Your credit report equals your financial reputation and shows how good you are at paying debts.
In addition to your personal credit report, check the business credit score too. The credit reference bureaus look at similar factors to those used to determine your personal credit score. The lenders need to determine if the business is reliable enough for them to take a risk and lend it their money. One of the factors they consider is the ability to pay the loans on time. A business with a record of paying its financial responsibilities on time will have an advantage over one with a poor repayment history.
How to improve your credit score
You have an opportunity to go through your credit report and raise an issue over incorrect entries of transactions that were omitted from the report. The first step to improving your business score is to ensure that your credit report does not have any errors or all the errors are adequately corrected. Then, clear any delinquent loans and debts before applying for your business loan.
You can also clean up your credit report by settling some of the monies you owe. Taking credit and paying it back on time is a sign of a healthy business. Do not close down the old accounts after completing the payment. These accounts help in building your credit history.
Show plans for the loan request
The lender will not just give you money because you qualify for some loan. Instead, they want to know what you plan to do with the money. Therefore, you should have specific plans for the money you are borrowing. The plans should be beneficial to the business and convincing enough to get the lender to loan you cash. Lenders like very specific plans for every coin lent. Besides, it may help to bring your revenue projections to show the impact of the loan and your ability to pay back the money.
The one thing that may be holding you back from operating your business efficiently or taking advantage of new business opportunities is the need for more capital. If you are searching for the right Providence small business financing for your specific needs, reach out to our team at Delancey Street. We provide merchant cash advances, small business loans and lines of credit with funding amounts up to $2 million.
When you turn to us for small business financing, you can expect:
Financing tailored to suit your needs
The ability to use funding without restrictions
Options available for applicants with bad credit
Fast funding within two days
Creative payment options that facilitate simplified repayment
If you are ready to learn about the loan terms that we can offer, apply for small business financing through Delancey Street today.
Your Source for Fast Cash
As eager as you may be to apply for small business financing and to get the funding that your company urgently needs, it is important to walk through a few preliminary steps. We are the small business lender that you can count on to respond to loan requests quickly. However, you understandably do not want to talk through a loan process without careful planning and research.
Taking the Important First Step
Before you apply for financing, analyze your need for cash and determine how much money would satisfy your needs. This will help to steer you in the direction of the right financing program. In addition, spend a few minutes reviewing your personal and business credit rating. Because many Providence business loan programs have minimum credit rating requirements, you may discover that your personal and business credit scores are limiting factors that impact the loan programs that you can feasibly consider.
From a lender’s vantage point, your credit rating and history directly correlate to the risk that the lender assumes by offering a loan or line of credit to you. Those who have significant creditworthiness may be more likely to qualify for financing and may receive better loan terms. On the other hand, poor business and personal credit ratings may be an indicator of risk. If your Providence small business loan request is approved, you may qualify for a higher rate than what someone with better credit scores may qualify for. Because of the significance of your credit rating in relation to small business financing, it makes sense to review your credit scores before applying for small business financing.
Improving Your Credit Rating
Regardless of whether you intend to improve your business or personal credit scores, this process begins by reviewing each item on the report. If you notice any errors, you should contact each bureau individually to request a correction. Another way to improve your credit rating is to pay down high balances and to bring delinquent accounts current. You may consider closing a few accounts that you are not using, but do so with caution. Closing accounts that have a lengthy history could actually lower your credit score. This is because the time that accounts have been open is also reviewed by credit reports, and older accounts are more advantageous to you.
Pulling Together a Providence Small Business Loan Application Package
Applying for small business financing may require some time and effort, but your diligence may be well-rewarded. This effort begins when you prepare a detailed outline of how the proceeds will be spend. Lenders want to know how the money will be used and how the use of funds will impact your business beneficially. In addition to creating a summary that outlines the use of funds, spend time reviewing and updating your financial statements. This includes cash flow statements, balance sheets and more. Lenders may require documents for the last several years as well as current figures. A business accountant may work to improve how these figures are presented without falsifying the information. Combine these documents with tax returns, bank statements and other information that the lender requires in order to review your loan request.
Reviewing the Loan Quote
If we approve your financing request, you will have the opportunity to review and agree to a loan quote. Because the terms and fees for the loan will impact your business significantly, carefully review the quote. Feel free to ask questions up-front so that you make an informed decision about your business’s finance.