For understandable reasons, some business-minded folks may find the process of applying for business loans either tiresome or too much trouble. There are many reasons a business would find the need to apply for a loan. It could be for financing equipment or renovating their office space, or perhaps when they’re considering expanding their franchise.
Still, prior to applying for a business loan, the company must first determine exactly how much it needs. Have a well-thought-out budget supported by financial projections. As soon as you’ve done that, though, follow the tips below from Jordan Credit Union and get started on the loan application process.
Steps in Applying for a Business Loan
- Be aware of important numbers pertaining to your request. First off, your credit score needs to be at least 650 before the lender would even give you the time of day. In addition, if you have a personal debt, it must not exceed 33% of your gross monthly income. Some lenders are willing to grant loans quickly, provided that you’ve been in business for at least two years. Also, take the time to read reports on industry risks and cash flow; think about whether this new endeavor will truly be a profitable one for you, or at least if it would earn enough to pay off your loan.
- Find a lender. Options include commercial banks, non-bank lenders, region-specific lenders, and micro and alternative lenders. Take the time to research and find out which type of lender is perfect for your needs.
- Prepare the loan application package for submission. The package includes the business plan, the owner’s/owners’ resume(s), financial projections and results, personal finance information, credit history, cash flow projections, your profile, and a ton of other tasks and links.
After you’ve gone through all that, give them two to four weeks to get back to you and your request. Don’t be surprised if the lenders ask for more documents to support your request and validate your identity.