Examine Your Personal And Business Credit
Any small business loan you apply for is going to require the lender to take a look at both your business and personal credit. If your business is newer and doesn’t have as much of a credit profile, your credit and that of other owners or partners in the business will be checked by the lender. This will include both your FICO score from between 300 to 850, and your actual credit report which will show your personal credit and debt activities as reported to the three credit bureaus Equifax, Experian and TransUnion. Your business credit score, if you have any is weighted in between 0 and 100 and is reported to Equifax, Experian and Dun & Bradstreet. Improving your credit primarily depends on paying bills and credit card balances on time and keeping your credit utilization low, but you also can do so by checking your credit report and working with the bureaus to remove inaccuracies from it. Getting your personal credit report to do this is pretty easy because all you need to do is go to AnnualCreditReport.com to order it from all three credit bureaus for free once a year. Your business credit report, on the other hand is not free and has to be ordered separately from each individual bureau. But resolving any errors on this also helps your overall score tremendously.
Decide Which Loan Would Work Best For You
Once you know what your credit looks like, you’ll need to figure out which kind of business loan works best for you. Every loan essentially falls into either a secured or unsecured loan category. The lower your credit score, the more likely you’ll need to use a secured loan. The better your credit score, the more likely you can qualify for an unsecured business loan. But keep in mind that even though unsecured business loans generally have stricter requirements to meet, they aren’t always the better deal.
Secured business loans are backed by business assets such as a commercial property, business inventory, equipment and invoices which could be seized and sold by the lender in the event of a default. Unsecured business loans do not technically require collateral. Be aware though that both secured and unsecured business loans could require you to pledge personal assets including your home as collateral. If you’re looking for a loan that’s intended for more long-term use, has lower interest rates and more flexibility overall, a secured business loan is probably a better fit for you. If you have great credit, don’t want to put any assets at risk and only need a loan for a shorter period, an unsecured business loan may work for you if you’re willing to pay slightly higher interest rates.
Assemble A Comprehensive List Of Documents
The hardest chore when trying to get a small business loan is making sure you have every document, and making sure those documents are complete. Every lender will ask for different documents they’ll want to see, but you should expect to be required to present the following:
- Personal and business income tax filing information
- Business payroll, state and municipal taxes
- Registration and incorporation documents
- Business income statement
- Profits and losses sheets
- Commercial leases if applicable
- Practice licenses if applicable
- Copyright and trademark documents
- A detailed business plan
Your business plan is by far and away the key document that you need to have prepared to present. This gives a working picture of your business showing all the managers, financial workings, accounting, growth plan, purchasing agreements and suppliers and so much more. Once you’ve been able to locate and organize your documents, you can explore our various small business loans in Greenville SC to see if they would benefit you. Whether it’s an SBA approved loan or an alternative form of financing, contact us today to learn how our financing works.