The good news is you are in control of being prepared for the small business loan application process. Here are a few steps you can take to better qualify for small business loans in Columbus, GA.
Raise Your Credit Scores (Business and Personal)
When you apply for a small business loan, the first thing the loan officer will look at is your credit score. After all, your credit score provides the lender with a snapshot of how you’ve handled credit in the past.
Before you submit an application to any lender, check your personal and business credit reports. Do your reports detail any delinquent accounts? What are your credit scores?
If there are any issues on your credit report that are potential red flags for lenders, you should take care of them immediately. This includes paying off old debt and checking your credit report for inaccuracies.
FICO credit scores for personal accounts fall between 300 points and 850 points. A very poor credit score range is 300 to 579 points. A fair credit score range is 580 to 669 points. A good credit score range is 670 to 739 points. An excellent credit score range is 740 to 799 points. An exceptional credit score range is 800 to 850 points.
Your business credit is equally as important as your personal credit. Business credit scores range from 0 to 100 points. Business credit scores are managed by Equifax, Dun & Bradstreet and Experian.
The credit score requirement depends on the small business lender. It’s a good idea to learn about the requirements before you submit your application.
Understand the Lender’s Requirements and Minimum Qualifications
In order to be a strong small business loan applicant, you must meet the lender’s qualifications. That’s the reason you should find out about the requirements before you apply. By getting the qualifications early, you won’t waste your time applying for a loan that isn’t suitable for your situation.
Minimum criteria varies according to each lender. However, most lenders carefully review your company’s annual revenue, credit scores and time in business. If you’ve recently experienced adverse financial actions such as a bankruptcy, foreclosures, past delinquencies or a repossession, small business lenders may not consider you for a loan.
Loans from the Small Business Administration (SBA) have strict application standards. To be eligible for an SBA loan, you must meet the size, revenue and credit requirements. If you’ve defaulted on a government loan (FHA mortgage or federal student loan) in the past, you may not qualify for an SBA loan.
Get Your Financial Information in Order
When you apply for small business loans in Columbus, GA, your lender will require you to provide all types of legal and financial information. These documents will be used to assess your creditworthiness. Documentation includes commercial leases, business / personal tax returns, a copy of your driver’s license, business licenses, a resume, Articles of Incorporation, financial projections and a balance sheet.
It’s important to take time to gather these documents before you submit your application. If the required documentation is missing, you’ll be required to provide it before the lender makes a loan decision.
Create a Business Plan
Since you’re applying for a loan, your lender will require you to demonstrate your ability to repay the loan on time and in full. For that reason, you should create a strong business plan that provides details about your company description, management team, an industry analysis, service / product descriptions and sales strategy.
Getting approved for small business loans requires a serious commitment of time and resources. These tips can help you gather the information that you need to demonstrate your business is worthy of a small business loan.