What Are Your Personal and Business Credit Scores?
In recent years, there’s been a lot more attention paid to credit scores, including how yours can impact your financial future. Your personal credit score, also known as your FICO score, will range from 300 to 850, and your goal should be to increase your score as high as possible. Your personal credit score will be a determining factor in whether or not you are approved for small business loans in Duncan. Specially, lenders will assess how much debt you have, your payment history, the types of credit you have, how much time you have had credit and any recent credit inquiries. Of all of these factors, the most important one is your payment history. If you’ve been in business for a while, then you’ll probably have a business credit score, which will range from 0 to 100.
Fortunately, you can get a copy of your credit report for free every year from AnnualCreditReport.com, which will allow you to dispute an errors. While you might not think this is necessary, the Federal Trade Commission has reported that a significant number of consumers have found errors on their credit reports, and 20% of them experienced an increase in their credit score after the errors were removed. There are three credit bureaus that govern your personal credit, which include Experian, TransUnion and Equifax. The three credit bureaus for your business credit score are Dun & Bradstreet, Experian and Equifax.
What Are Your Lender’s Minimum Requirements?
There’s actually a way to take the frustration out of qualifying for small business loans in Duncan that involves finding out the minimum qualifications and requirements of lenders – you’ll want to either meet or exceed those qualifications. Although they vary, common requirements can include specific criteria related to your revenue, credit scores and years in business. Lenders will also want to know if you’ve had any defaults or bankruptcies.
Keep in mind that qualifying for SBA loans requires you to meet more stringent requirements, such as having high personal and business credit scores. If you don’t think you’ll qualify, then you have the option of pursuing an online small business loan because online lenders tend to have less stringent requirements.
Can You Provide the Required Documents?
When preparing to apply for a small business loan, it would be in your best interest to make sure you have all of the required documents on hand, or easily accessible. Here are examples of documents that you may be expected to provide: Articles of Incorporation, driver’s license, business licenses, income tax returns (personal and business), income statement, balance sheet, bank statements (personal and business), commercial leases and your resume.
If you don’t feel quite prepared to provide a wealth of documentation and want another option, then you should consider an online lender, which tends to be a faster process where fewer documents are required. Just keep in mind that the loan product might be more expensive.
Do You Have a Business Plan?
Without a doubt, business plans are a useful document that can provide the vision and clarity necessary to achieve business success. Quite frankly, it’s a document that every business should have, for a variety of reasons. Lenders often request a business plan because it includes financial projections that will spell out how you intend to increase your profits, which means you’ll be able to pay the loan back.
Can You Provide Collateral?
Some lenders will require you to provide collateral just in case things go south and your business fails. If you are not prepared to provide collateral, you can always look into obtaining an unsecured business loan.