Top 4 Ways For Qualifying For a Business Loan
Business loans are essential to acquire the capital for running your business. The whole process of getting the loan amount can be tedious and lengthy if you don’t research about the loan criteria and lending process. Before the interest rates, payment schedule and various terms and conditions are set while acquiring a loan, its approval is needed and it depends on some key factors which we will be discussing here. These are the top four ways for qualifying for a business loan.
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#1 Get ready with a solid business plan
The lenders get easily convinced when you have a proper roadmap for your business. This roadmap and usage of loan amount along with future growth strategies comes in the form of a business plan. If your business plan is not impressive enough to convince a lender then there are less chances of loan approval. The lenders basically are interested in finding if they can trust your business acumen. If your business is new then having a business plan is very important. With old businesses lenders know that the business has already survived for many years and that the loan amount will be smoothly paid back.
#2 Maintain a good credit score
A credit score is a number which defines your creditworthiness. If you have a very poor credit scores then many loan options will be shut down for you. Many loan organizations defined a credit score below which they don’t qualify the applicants for loan process. However this doesn’t mean that you cannot qualify for any business loan with poor credit score. There are many firms giving small business loans with even less credit score. The rate of interest may be little more but sometimes lenders don’t decide rates of interest solely on credit score. Hence finding such nontraditional lenders who would qualify you can save you time and hassles.
#3 Keep your documents ready and audited
There are some loan companies that demands for last one or two years income tax returns document or sometimes financial statements audited by a good auditor. If not all then the previous year’s turnover sheet must be duly audited by a CA. Not all loan giving companies requires this but having this ready and furnished certainly increases your qualifying quotient.
#4 Wisely choose from the lending options
With so many lending options these days it gets very confusing for an applicant as to where he should be focusing. For example, the SBA business loans may be a very good option for small business loans but it usually requires four to six weeks of processing. If that is the duration you cannot wait for then you should consider choosing from other lending options. Further sometimes the qualifications and requirements of loan giving companies are very strict, thus if you have been late on payment of premiums for any past loans you are directly disqualified and it would not make sense to apply or keep hopes from such companies. There are borrowing options like home equity lines of credit where you are risking your home against the loan amount. Secured loans are always easy to get and are best option for those who have a poor credit score. If you have a very good credit score then you should opt for the unsecured loans offering you best rate of interests and best benefits.
There are many other options like online lending companies, Peer to Peer lending and much more which are the nontraditional methods for getting a loan. Hence do your research based on the loan amount you need and then decide where you should apply. Regardless of the borrowing option, the above four points will always be the most important factors for qualifying for a business loan.