Jewelry Stores Small Business Loans
Jewelry Stores Business Loans
If you are applying for your first business loan, you need to prepare both mentally and physically. That kind of preparation will make the process as painless as possible. Let’s go over what is involved with getting a small business loan.
Considerations Before Applying for a Jewelry Stores Small Business Loans
Don’t start filling out the business loan application yet. You need to consider a few things before you submit any type of paperwork.
Why do you need financing? You need firm plans for how you are going to use the financing and how you are going to repay it.
Is a small business loan right for your company at this time? Small businesses have many options for obtaining financing including credit cards, invoice financing, angel investors, or business loans.
Credit Is Key
Lenders who offer SB loans need reassurance that you will use the money as intended and pay it back promptly. That is why the credit scores for your business as well as personal finances are key to getting a loan.
Understanding your credit scores and working to improve them will increase your chances of a successful loan application.
More About Your Business Credit Score
Keeping business accounts separate from the start makes it easier to build your business credit. The separation also avoids confusion and keeps personal financial issues out of your company’s business.
How does your business credit translate into your business score? There are three different companies that calculate credit scores for business: Dun & Bradstreet, Experian, and Equifax. All of them put a strong emphasis on making payments on time to creditors.
How Your Personal Credit Score Affects Your Jewelry Stores Small Business Loan
Small business loan lenders look at a borrower’s personal creditworthiness in the application process. They want to know that the business owner is responsible with their own personal finances, as that is an indicator of how they manage their business finances.
You are likely familiar with your personal FICO score and even your VantageScore. Both scores rank consumers on a scale between 300 and 850. The higher the score, the better. The biggest factor in determining that score is payment history.
Improving Your Credit Scores
Before you take action on your credit scores, you first need to know what they are. You need to get your personal credit reports from the three major credit bureaus: Experian, TransUnion, and Equifax. You are allowed to get a free copy once a year. To retrieve your business credit history, visit Nav or CreditSignal.
Your credit reports show you where you can improve things. Use these three tips to improve your credit score quickly.
Look for errors on each report. If you find a mistake, report it to the credit bureau. They will investigate the situation and remove it if they find it was an error.
Get past due debts caught up. Contact your creditors and pay the debt down. The lower you get the balance down the better your credit score will be.
Get rid of tax liens. Unresolved tax debts are a major red flag to small business loan lenders. Ask for a payment plan or pay the total off completely.
Use these tips to improve your credit over the long term.
Keep your credit utilization below 30%. Ideally, your utilization should be below 10%, but 30% shows you pay your debts but don’t rely on debt for basic needs.
Don’t close an account that you pay off. This will lower the amount of credit available which lowers your credit scores.
Mix up your credit. If you can afford it, add another type of credit to the mix. A personal loan or a mortgage loan shows that you can use your credit wisely.
Don’t open several accounts in a short amount of time. From a lender’s perspective that may indicate that you are trying to raise funds quickly.
Use a credit monitoring service. You need to know what your credit standing is at all times.
Create a Solid Use Case
Lenders want to know how you intend to use the funds you receive with a small business loan. Being as specific as possible makes this easier. You need to outline how much you want to borrow and why.
Create a plan for how you intend to use the funds. Outline the reason why you need the loan and estimate the cost of everything you want to use the funds for. Let’s say you want to buy a new piece of machinery for your business. You should outline how much it will cost to purchase and any costs associated with installing and running it. You need to estimate how much revenue the machine will produce. Outline how you came up with your estimate.
Know Your Financial Statements Inside and Out
Your business’s financial statements show how well your company is doing. You need to include an income statement, a balance sheet, and a cash flow statement.
These financial statements will tell you where you are making money, where your primary costs are and if you are making a profit.
If your company is not making a profit, or if you want to improve your profitability, create a plan for how you intend to reach your goals. That information will give you a stronger case for your loan application.
Get Your Jewelry Stores Small Business Loan Documentation Together
With all the homework you did with examining your credit scores, building your use case and examining your financials, you are ready to start your business loan paperwork.
Lenders will want to see your financial statements for at least the past two years. You will need to provide copies of at least one year’s tax returns. You will need to provide a list of who owes your business money and to whom your company owes money.
The Jewelry Stores Small Business Loan Lender’s Offer
If the lender is satisfied with your loan application, you will receive a loan offer from the lender. The offer will show how much the lender is willing to loan you. It will also outline the APR and the interest rate.