Liquor Stores Small Business Loans
There is little doubt that seeking a Liquor Stores Small Business Loan can be a daunting experience. As a small business owner, there is a good chance that you’re learning and growing your company as you go along. It’s not uncommon to have ‘growing pains’ and need a lump sum of capital for any number of reasons.
In today’s day and age, company owners of all sizes have access to business loans from more financial service providers than ever before. Planning and organization are important steps to take not to get overwhelmed by the business loan application process. To help you get a better understanding of the business loan process, we’ll review how it works, to alleviate stress while getting a small business loan.
Before Applying for a Liquor Stores Small Business Loan
Ask yourself and any business partners some questions first. Do you need to get financing? Can you raise funds another way? Is this an expense you can cover if you work a little harder? Every business situation is unique, which is why there are so many financing options available. Depending on the nature of your needs, other financial services may offer better terms or easier approval parameters. Business credit cards, credit lines, angel investments, invoice factoring, and merchant cash advance services are alternatives for smaller companies seeking credit or cash.
Each financial service has advantages and disadvantages for the borrower. By understanding how each product is advantageous, business owners can decide what financial products are right for them.
When applying for a liquor store small business loan, company owners are well served to be familiar with their credit score and their use case. This information is required to prepare a successful application for a liquor store small business loan.
Know your credit score before asking for a liquor store small business loan
When applying for a liquor store small business loan, a high credit score is preferred.
When banks and financial institutions lend money, they want to make sure they will get repaid the capital they loaned.
Credit scores get calculated using several indicators. These factors include things such as payments made on times, your current credit usage, number of accounts, type of accounts, and your debt to income ratio. All of these factors are calculated to derive your credit score. Higher credit scores indicate better credit management and repayment history. A potential borrower with a higher credit score is likely to get better offers than a borrower with a lower credit score.
For many small business owners, taking care not to mix business spending with personal spending can present an issue when it comes time to apply for a liquor store small business loan. Step one to building business credit is to open up separate accounts for your company and your private spending.
Ultimately, business loans get granted based on the creditworthiness of the borrower. Lenders want to see a long history of on-time payments with other creditors. Depending on the credit score provider, this number falls between 300-850 points. Excellent credit scores fall in the higher range of this number.
Factors that negatively impact credit scores include the following:
High Balances – While you might think “I’ve got credit. Why not use it?” there are many reasons not to. When lenders look at your credit profile, high balances can affect your score negatively, even if you’ve never missed a payment or been late.
Too Many Hard Inquiries – It’s difficult to get around hard credit inquiries when seeking loans and lines of credit. If possible, try to group hard queries instead of spreading out inquiries over months. When you have an excessive number of hard inquiries, it shows that you’re actively seeking credit, which some lenders don’t like.
Credit Utilization – Credit utilization is a measure of how you are currently using your revolving credit. A high utilization score can get penalized by some credit scoring system, limiting access to new credit. For best rates and offers, keeping credit utilization at around 10% is a best practice.
Improving your credit score to qualify for a liquor store business loan
If you don’t have an immediate and urgent need for capital, take steps to improve your credit before you apply for a loan is smart. First, find out where your credit stands by checking your reports and your scores. Consumers can access their credit reports for free at many online websites, including Credit Karma, AnnualCreditReport.com, and others.
Once you’ve logged in, check to make sure all the listed information is correct. If you find errors, such as accounts that aren’t yours, misreported payments, wrong addresses, or other disinformation take action to get these items removed from your report. Unless these inaccurate marks get reported and disputed, they continue to affect your credit score.
If you see any past due or collection accounts, get in touch with the creditor to verify the debt or make payment arrangements. After doing so, make every effort to pay your bills on time going forward.
The same methodology applies to tax liens. Get in touch with the appropriate agency to get payment information and clear the entry from your credit report.
While making efforts to get your credit report cleaned up help in securing financing and funding in the future, it’s imperative to incorporate good credit habits as a long-term strategy to qualify for financial products at the most favorable terms.
Don’t close accounts – Accounts are the lifeblood of your credit profile. While you might think that closing accounts that you’ve paid off or you’re not using is a good idea, the truth is quite the opposite. As long as the dormant account is reporting to the major credit agencies, this adds more ‘reporting history’ to your credit file. In turn, this helps show your capacity to manage your credit responsibly. Additionally, closed accounts can report as a negative mark on your credit report.
Keep a mix of credit accounts – If your budget supports it, use a variety of credit products. Lenders like to see that borrowers have a proven track record of making payments on installment loans, unsecured debt, and credit cards. Further, these payments help boost the consumer’s credit score over time.
Get credit monitoring – Credit monitoring is the easiest way to track changes to your credit report is by using a credit monitoring service. If the monitoring service detects unusual activity, such as hard inquiries or a missed payment, consumers get alerted to the changes immediately.
When applying for a business loan, know the specifics – When applying for a business loan, knowing how much you need and what you need it for is helpful for lenders to assess your request. You should answer why you need funds, as well as have an itemized list of what each item is expected to cost. For instance, if you’re going to make capital improvements, having an estimate or a proposal from a contractor shows how the funds get used. Giving potential lenders a clear idea of how you plan to use borrowed funds helps them decide whether or not to lend.
Know Your Financial Statements
Every successful liquor store owner knows that you need to know the financials of your company to get ahead. To save money, check for leakages in your budget and ways to reduce expenses and costs. By doing so, you’re cutting your operational overhead, which puts your company in a stronger business position. You may be able to reduce energy bills by running the HVAC system more conservatively or reduce inventory costs by buying items in bulk amounts that qualify for volume discounts. As the saying goes ‘a penny saved is a penny earned. By getting a grasp on your finances, you’re better positioned to qualify for a loan when you decide to apply.