If you need money to grow your business, then you’ve probably thought about applying for a small business loan. The information provided below offers insights into requirements for different options, such as SBA, bank and online small business loans. As with most things in life, understanding what to expect and having a chance to prepare will eliminate any unnecessary frustration.
Boosting Your Personal and Business Credit Scores
Your personal credit score can make the different in whether or not you are approved for small business loans in Jacksonville FL, so you’ll want to raise your score if possible. The range is from 300 to 850 and it’s predicated on how you’ve paid your debts in the past. Your credit score is also called a FICO score, which considers how much debt you have, your payment history, the amount of time you have had credit, the types of credit you have and recent inquiries into you credit. Of the factors mentioned, your payment history is the most important because it represents 35% of your FICO score.
The Federal Trade Commission has reported that many consumers have errors on their credit report, which can be detrimental to your financial health. Conveniently, you can receive a copy of your credit repot, at no charge, by visiting AnnualCreditReport.com. If you find errors, you can contact the three credit bureaus (Experian, TransUnion and Equifax) to resolve the issues. If there are errors on your business credit report, then you’ll need to contact Dun & Bradstreet, Experian and Equifax. Approximately 20% of consumers who have resolved inaccuracies in their credit report have experienced an increase in their credit score. Incidentally, there’s a different system for your business credit report and the score will range from 0 to 100.
Understanding Minimum Loan Qualifications
In order to become a strong applicant, you’ll need to both understand and meet the lender’s minimum qualifications. As a matter of fact, you can increase your chances of getting approved if you exceed the requirements, which often involves your annual revenue, credit scores and the amount of time you’ve been in business. If you’re interested in an SBA loan, then you should be aware that the minimum requirements can be tougher than other lenders. For instance, you might have to have higher personal and business credit scores. Additionally, the SBA has a list of ineligible businesses that include financial, real estate and insurance companies, among others.
If all of this sounds a bit overwhelming, you can relax a bit because there’s another option; online small business loans. Online lenders tend to be more lenient. Just keep in mind that you might pay a bit more for the ease of obtaining an online small business loan.
Gathering Financial and Legal Documents
Perhaps one of the easiest aspects of preparing to apply for small business loans in Jacksonville FL is compiling the necessary documentation. For example, many lenders require you to provide Articles of Incorporation, business licenses, personal and business income tax returns, income statement, a photo of your driver’s license, balance sheet, personal and business bank statements and commercial leases. You might also have to provide a copy of your resume to demonstrate your related business and management experience. If you’re interested in a more streamlined lending process, then an online loan might be a better choice for you.
Creating a Business Plan
You may already have a business plan that details your mission, vision, strategy, financial projections and other key aspects of your business. If not, you’ll need to create one that sufficiently showcases your plan for increasing profits. Here are some of the elements that your business plan should include: Company overview, management team, product and/or service description, sales and marketing strategy, operations plan and industry analysis. Lenders may also require a SWOT analysis that details the strengths, weaknesses, opportunities and threats to the business.
Last but not least is collateral, which lenders may require to back your small business loan. If you don’t have collateral to offer, you can inquire about other options, such as unsecured business loans.