If you are wondering how to apply for a small business loan, you may need to apply for a loan immediately. Still, take the time to do your research and get the right skills.
It can take months Get a business loan, Especially supported by the U.S. Small Business Administration. But by understanding all your options and not rushing through the process, you will be in a better position to approve – and avoid wasting time or money.
Here are four steps to applying for a microfinance loan.
1. Decide where to apply for a small business loan
Banks, alternative online lenders and other sources are provided Business Loans. The best place to apply for a small business loan is usually wherever you are eligible for low interest rates. But the following questions should influence your decision
How good is your finances? Bank and SBA loans Usually offer very competitive interest rates. Although those low rates come with strict qualifications: To be financially viable you need at least two years in business, strong annual income and good credit (many small business lenders need at least 650 FICO points). If you have Bad credit Or if you can’t hit those signs, your best bet may be to apply for a small business loan from an online lender.
What kind of financial support do you need? lot of Types of business loans Available, but not from every lender. If you buy very heavy machines, for example, a lender with a lender Device Finance It can make sense. For future business capital, consider the business credit line you can take as needed. If you want to apply for an SBA loan, you can contact participating lenders using the agency Lender related tool.
When do you need the loan? If you are in a hurry to finance, you may want to give priority to online lenders. These lenders may have automated processes that allow them to quickly review and submit applications Fast business loans. If you can wait more than a few days, SBA Express Loans It may offer faster return times than other federal options, but with the same benefits as competitive rates and flexible terms.
If multiple lenders meet your needs, see what allows you to qualify for any interest rate in advance. This option may be more common among online lenders. For traditional lenders, such as banks, consider talking to a loan officer before applying to make sure you qualify.
2. Get your application materials
Each lender may need different documents for a small business loan application. Most of them may require some of the following:
Information about your business. These items go from basic – like your business name, address and tax ID – to detailed documentation. For example, a lender may need a Business plan Or an idea of how to use the loan.
Accounts for you and your business. These may include documents of your annual income, such as profit and loss statements, tax returns for business owners and the business itself, and bank statements.
Details about the business owners. You may need information such as names, social security numbers and addresses for anyone over a certain percentage of your organization, especially 20% or 25% depending on the lender or lender.
3. Review your micro-business loan application
Before applying for a small business loan, consider having someone else look at your application, especially information that may be open to translation as a business plan. One good potential is a small business development center or SBC.
SBCs are partially funded by the federal government. Each branch includes qualified business professionals who can provide support on topics such as entrepreneurship and financing. You can get SBDC in your state using SBA Finder tool.
Make sure you double check that your business loan application is in the correct format requested by the lender. The lender may have questions when reviewing your application, but you will make a decision as soon as possible by minimizing unnecessary back and forth.
4. Follow the lender’s instructions to apply
Once everything is settled, it is up to the lender to decide exactly how to apply for a small business loan. For example, an online lender Fundbox Allows you to link your business accounts through the website to qualify for cash.
Many traditional financial institutions, such as banks and credit unions, can contact you at the branch office or by telephone. For example, Bank of America accepts online applications for some of its products – such as Business Automatic Loans -But requires an appointment in person or for others.
No matter how much you apply, know the lender’s normal return time. That way, you know when to wait for your decision to be approved.