It is easier for you to qualify for small business loans in Lawrence KS if you prepare for them. Regardless of whether you apply with a bank or online lender, you will need to familiarize yourself with the lender’s requirements. This will help you save time and frustration.
Build Business and Personal Credit Scores
Your personal credit score is between 300 and 850. The higher your credit score is, the better. Lenders use your credit score to evaluate your ability to pay back the loan. Your payment history, total debt, the type of credit that you have and how long you have had credit will determine your credit score.
One of the most important things that you can do to build your score is to pay your bills on time. However, you may have bad credit due to an error on your credit report. It is estimated that 25 percent of consumers have errors on their credit score. Eighty percent of people do not dispute the errors on their credit report.
You can get a free copy of your credit report by going to annualcreditreport.com. You can get one free credit report per year. If you are an established business owner, then you should check your business credit score. The business score ranges from 0 to 100.
Know the Lender’s Requirements
It is a good idea to familiarize yourself with the lender’s requirements. Some lenders are more flexible than others. You may be able to get a small business loan even if you miss one of the criterion. There are typically minimum credit score requirements. Lenders do not want to lend to someone who has had recent delinquencies or bankruptcies.
If you want to get a loan that is backed by the Small Business Administration, then there are additional requirements that you will need to meet. You will need to meet revenue requirements. You will also need to have a good credit score. There are also businesses that are ineligible for loans that are backed by the Small Business Administration. This includes real estate investing, insurance companies and financial businesses.
It will be easier for you to get one of the small business loans in Lawnrence KS if you apply with an online lender. They typically have less stringent requirements.
Gather Legal and Financial Documents
You will have to provide several financial and legal documents. This includes the following.
- Business and personal tax returns
- Income statements and balance sheets
- A copy of your driver’s license
- A business license
- Commercial licenses
- Financial projections
- Business and personal bank statements
- Articles of incorporation
- A resume that shows that you have business experience
Create a Strong Business Plan
Lenders want to know that you have the ability to pay. That is why you will need to have a strong business plan. Your business plan should have projected and current financials, new loan payments and ongoing expenses. A strong business plan will make your lender feel better about hiring you.
You will need to provide collateral to pay back the loan. A collateral is an asset that is used to back the loan. Equipment, inventory and real estate are some of the things that can be used as collateral. The item can be taken if the loan is not paid back.
Some online lenders will approve you without collateral. They will likely require a personal guarantee. If you do not want to use collateral, then you will need to apply for an unsecured business loan.