‘Small Business Loans’
Today, there are innumerable small business loan options available. The business people need to be ace and savvy to check the latest available loan options that can benefit them. There are many types of loans such as SBA loans, online loans, equipment-specific loans, and other non-loan options like a merchant cash advance.
Borrowing from the bank
Borrowing money from the bank can be a great choice for many small business owners and entrepreneurs. For that help, they need to pass the potentially rigid qualification criteria. Doesn’t matter whether you have the right credit score, have met all the requirements, have enough money deposit, the loan you take from the bank might not be the best loan to discuss your situation. So, there is no harm to go deep into investigations and scrutinization. These processes will bring out the best loan plan that will fulfill your business needs.
How will bank review your loan application?
A bank is likely to investigate you, evaluate you and the authenticity of your documents and assets. Following are some basic criteria that banks look at:
Personal Credit Score: Banks generally check your personal credit score. They can be low or high, depending on the buyer. If the borrower showcases a healthy and well-developed business, other criteria can be easily fulfilled.
Collateral: If you want an approval for your small business loan, you will definitely require a good sum of money to secure the loan. This step helps the bank mitigate any kind of loss. Equipment, high-value assets, and real estate can be considered by the bank as collateral.
Time in Business: Every lender will look at your past records to decide whether or not you, as a small business owner, will be able to repay the money in the future. Generally, each bank likes to see your experience in business industry before they approve a loan.
If you want to apply for a loan at the bank, you will be needing to give detailed information about you and your business. The information needed varies from one bank to another. You must have complete knowledge about your business, financial health, and your personal creditworthiness. Following are the list of things that bank would want to see:
- A neat and clean, well-detailed business plan that demonstrates why you are looking for a loan. If any, what assets you will purchase from that loan. You can also be asked about your strategies and how you think your business will gain benefit from using the borrowed funds.
- You will also need financial statements about your business from the past three years. It will also include your profit and loss statements (P&L) and balance sheets.
- A detailed information about your tax returns. From the past three years.
- Debt schedules.
- A well-made document of your Personal financial statement.
- Details of any lease for the business premises, if applicable.
- Financial expectations for at least three years. You will have to describe how do you expect your revenue and expenses to be. You will also have to plan and demonstrate how these plans will make it possible to repay the loan.
Detailed Information about the assets you are going to purchase. It will also include a copy of the purchase agreement.
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