If you’re in need of a small business loan and wondering where to start, you’ll find the information provided below helpful. When seeking small business loans in Kansas, the process can be less complicated if you’re prepared. Whether your goal is to obtain a loan through SBA or an online lender, there are requirements that you should know about.
Managing Your Credit Scores
In the current technological era, more people are aware of different services provided online. One of the most important websites that you can visit when seeking a small business loan is AnnualCreditReport.com since they will provide you with a free credit report every year. This is important because you’ll want to make sure the information being reported is accurate. In the event that errors are found, you can contact Experian, Equifax and TransUnion, which are the three credit bureaus that report consumer information. The goal is to increase your personal credit score, also known as a FICO score, as much as possible. The range for FICO scores is from 300 to 850.
As it relates to your business credit score, it’s somewhat different than your personal credit score. Dun & Bradstreet, Experian and Equifax are the three credit bureaus that report on business credit, and the scores range from 0 to 100. Since SBA and other loan products require an excellent business credit score, you’ll also want to make sure this report is error-free.
Understanding Lender Requirements
One of the best ways to make sure you have a strong application when applying for small business loans in Kansas is by getting an understanding of lender requirements so that you can meet or exceed them. You’ll find that some lenders are somewhat flexible, while others are more stringent when it comes to satisfying lending requirements. In addition to your credit score, your annual revenue and the number of years that you’ve been in business will factor into the lending decision.
There are a variety of different reasons why a loan might not be approved. For example, if you had a bankruptcy or payment delinquencies, then your loan request might not be declined. If you’re applying for an SBA loan, then your business can’t be a nonprofit organization, a life insurance company or a real estate investment firm. You might consider applying for a loan with online lenders since they tend to be more lenient. Just keep in mind that online loans might be easier and faster to obtain, but they are also more expensive in most cases.
Compiling Financial and Legal Documents
You probably won’t be surprised to find out that there’s a good amount of documents that must be provided when applying for traditional loans. Here are examples of the documents often requested: Articles of Incorporation, commercial leases, personal and business income tax returns, personal and business bank statements, balance sheet, income statement, your driver’s license and business licenses. Sometimes a resume is required in order to confirm your business experience and management skills. If you decide to go with an online lender, you’ll find the process to be more streamlined, which means fewer documents are required.
Creating a Business Plan
Sometimes there’s a tendency to either not create a business plan or create a business plan that isn’t comprehensive. When seeking a small business loan, it’s best to put as much effort into the development of your business plan as possible because it’s a document that will be requested by lenders and used as part of the decision making process.
Your business plan should include a company description, industry analysis, a list of your management team, an overview of products and services, an operations plan, a sales and marketing strategy and a SWOT analysis (strengths, weaknesses, opportunities and threats).
Whenever you receive a loan, there’s always a chance that something will happen that prevents you from paying back the loan. With this realization in mind, lenders often request collateral that might be in the form of inventory, real estate or equipment.