Anyone can be an entrepreneur. With the right business idea and a commitment to hard work, you can see your business thrive. However, it takes money to make money; to build your small business and become a successful entrepreneur, you will need a large amount of initial funding, which most entrepreneurs acquire in the form of a small business loan.
While applying for a small business loan might seem like a daunting task for a first-time entrepreneur, you might find the process easier to understand when it is broken down into four easy-to-follow steps. Here are the four steps you need to complete to acquire your small business loan and start building your business toward success.
Top 4 – Essential Steps to Acquiring a Small Business Loan
A wide range of traditional and non-traditional lenders offer small business loans. Small business loans can help your company succeed by funding new research and development, market expansion, improved sales and marketing initiatives, as well as the hiring of new employees, among other things.
Choose Your Lender
There are many different types of lenders that offer small business loans. The most traditional option is the bank, but not every entrepreneur should automatically assume that loans from banks are the most advantageous. In truth, you should explore many different lender options to find the loans with the best terms for you and your business, which most often includes the lowest interest rates. Some considerations you might make during this step include:
When do you need the loan? Traditional lenders move slowly, as they want to perform thorough research on you and your organization before they assume any financial risk. If you need funding in a hurry, you should look to online lenders, especially those with automated review processes, which can get money in your hands in a matter of days.
How are your personal and business finances? The better your credit, the better your loans. Both banks and the Small Business Administration can offer the lowest interest rates, but they will only extend loans to entrepreneurs and organizations with impeccable credit histories. If you have less-than-stellar credit, you might need to look to online lenders for small business loans. You can also follow some of the tips for managing small business finances.
Assemble Your Application Materials
No two lenders have identical application processes, primarily because no two lenders require exactly the same documentation. Before you submit your application for a small business loan, you should check and double-check their requirements, but you might save time by assembling the following application materials beforehand:
Information about your business, such as your business’s name, address, tax ID and any plans or proposals related to the loan.
Financial statements about you and your business, such as your annual revenue, profit and loss statements, tax returns and bank account statements.
Details about business owners, to include names, social security numbers and addresses for anyone with more than 20 percent ownership stake.
Information about collateral, such as the type of collateral you can offer and its value.
Review the Application
A small business loan application is not a throwaway document; it could make or break your success and the future of your enterprise. Before you click “submit,” you should review every inch of your application materials, making sure that the information you are providing is as accurate as possible.
You might ask a trustworthy colleague to perform a similar review, looking for simple mistakes like typos or grammatical errors. At the very least, you should be certain that you have included all the required materials in your application.
You can also take advantage of your local Small Business Development Center, which is filled with qualified business professionals dedicated to assisting you in various business endeavors, you include procuring financing like small business loans. If you have no one else to help you through the loan application process, you can lean on your region’s SBDC for guidance.
Follow Your Lender’s Instructions
Finally, it is time to submit your loan application. As you might expect, every lender has a different procedure for sending an application and related materials. Some lenders have convenient online submission forms, while others will need you to make several hardcopies of your information to be dropped off in person with a loan officer.
Failing to follow submission instructions could mean that some of your documentation gets lost and that your application is rejected for incompleteness, so it is of utmost importance that you know exactly how your lender accepts applications.
With the right small business loan, you can fund your entrepreneurial dreams and launch an organization to bring you success and happiness. Fortunately, it only takes four quick steps to apply for a life-changing small business loan.
Business finance is a proven strategy that helps companies, from business development through cash flow management, generate the necessary funds and scale up quickly. Profitable financial leverage is one of many financial advantages that a business can benefit from.
There are many options for business financing. But be aware that submitting lots of loan applications might harm the company’s credit standing. As a result, to be eligible for a business loan, submit a well-thought-out loan application while heeding the above guidance.