A timely business loan can help you get your company off the ground and allow you to fund big projects. Fortunately, getting a business loan doesn’t have to be a painful process. By understanding the criteria for qualification, you can narrow your search for a small-business loan that fits your needs. We’ve created a simple four-step guide to help you get approved for the right loan at the best rate.
Determine Your Needs and Goals
Before you go ahead and submit an application for a loan, it’s important to determine how much money you need and why exactly it’s necessary for your business. Is there an immediate need for more capital, or do you have plans to expand? A lender will want to know what type of project or purchase you need funding for so they can accurately assess whether or not it makes sense for them to lend to your company at this time.
Decide Which Type of Loan Will Work for You
Business loans come in a range of types with varied terms meant for your business needs. Term loans, for instance, are ideal for large purchases or business expansion. If you need funds for day-to-day working expenses, a line of credit is a good option. If you’re setting up a startup and need funds, you may want to apply for a personal loan or business credit card.
Understand Your Credit Profile
Before applying for any type of business loan or credit line, it’s important that you understand your current credit profile. This will, in turn, help you determine whether or not your business would qualify for financing in the first place. For instance, if your FICO score is below 600, it could be difficult to get approved for any type of financing from a bank or credit union. If your score is over 700, on the other hand, you may qualify for better rates because lenders know that you are less likely to default on their loans.
Shop Around
Now that you know what kind of loan you want, it’s time to shop around for rates and terms from different lenders. You can do this by visiting local banks or credit unions, checking online, or calling the lender directly. Make sure to check what rate they offer loans at and also consider other fees that may impact the cost of the loan. Be sure to pick a loan that has a competitive rate and straightforward terms.
