Whether you are a startup or just need some extra funds, you have probably considered a business loan. For small businesses to get off the ground, you’re going to need capital. This financing is often in the form of a business loan. Learning how to apply for a business loan will help you in finding the right one. For small businesses in the US, there are many different types of loans and loan programs. We’ll show you how to get started and what type of loans to look for.
How To Apply For A Business Loan
What you don’t know can hurt your business. However, it starts with doing research before signing on the dotted line.
Decide If You Really Need A Business Loan
Be honest with yourself about what you need for business financing. Are you going to need a loan to start a business? Perhaps you already have an established business and you need some extra funding to cover daily expenses. If you have found yourself answering “yes” to any of these questions, than you would benefit from a small business loan.
Create A Business Plan
“When you fail to prepare, you prepare to fail”. Creating a business plan is one of the most important steps in applying for a business loan. It doesn’t have to be highly-detailed either. You could create a basic outline in Excel or Publisher. Ideally, you will want a business plan before you visit a lender. Many lenders such as banks, credit unions and the SBA are going to want to see a business plan.
If you are a startup, here are some tips on how to avoid pitfalls in taxes and accounting.
It helps to have an idea of how much you are going to need. It will be easier to find what type of business loan you are looking for. You could end up borrowing more money than you need, which will result in paying that back in interest. On the other hand, some business owners are too hesitant on asking for a large amount of capital. Don’t undervalue how much money you’ll need. That could have an impact on the financial sustainability of your business.
Understand Your Personal Credit And Business Credit
Before you apply for a loan, you should check your personal credit history. If your business is a startup or less than three years old, your personal credit history will be evaluated along with your business credit history. Make sure your credit history is in order before seeing a lender. Make sure you:
- Do what you can to maintain a good personal credit score
- Check your credit report for any errors
- Make sure that your credit score is a 700 or higher (this will increase your chances of securing a loan)
It is recommended that you avoid using your personal credit for business loans. Using personal credit cards to pay for business expenses can hurt your personal score.
Choose The Best Type Of Loan
There are many different business loan options available. It is very easy to get overwhelmed by all these options. KAB Credit Services works with the following type of business loan options:
- Business Credit Cards
- Low-Interest Credit Lines
- Long-Term Conventional Bank Loans
- Term Loans
- Cash Flow Financing Up To $500,000 With No Collateral Or Personal Credit Requirements
- Unsecured Financing Up To $150,000, Even For Startups
- Asset Based Lending With Rates Less Than 5%
Understand What Type Of Lender You Need
Lenders are financial institutions and other organizations that work with the SBA to give small business loans. Traditionally, commercial lenders have been banks and credit unions. Today, there are many different types of lenders that you can choose from.
- Banks and Credit Unions – This is a good option if your business is already established with strong sales and cash reserves. You will need to have a good personal and business credit profile. However, these are not the best choice for a business owner who needs financing quickly.
- Online Lenders – Do you need money faster and don’t have specific collateral? An online lender may be a good choice for you. Keep mind that these lenders also provide term loans, lines of credit and most financing. Expect high interest rates and extra fees.
- Microlenders – If you are a new business, these types of lenders are good for you. Microlenders work with startups and new businesses. These are usually funded by non-profits, so they are typically smaller dollar loans and 0% interest.
Get Your Business Documents in Order
If you have an idea of what type of loan financing you might need, you can move into the application process. A loan officer is your first point of contact here. Before you meet with a loan officer, you should get all the necessary documents in order:
- Government-issued Identification
- Business License and Proof of Ownership or Articles of Incorporation
- Tax Return including the Schedule C form
- The name that you do business as
- IRS Form K-1
- Company stock certificates
Working with A Loan Agency
It is highly beneficial for you to work with a loan agency. Our team will help you secure the best loan for your business and help you understand how to qualify for a loan. It can be a process to get approved. Conventional banks will only approve you if you have a well-established business. However, some alternative lenders will lend depending on how much revenue you have. Our team even negotiates lender rates and terms for you to ensure you get the best terms available.
Who We Are – KAB Credit Services
At KAB Credit Services, our mission is to help entrepreneurs obtain the capital and credit they need to fuel their dreams. Whether you are just starting your business or looking for millions in capital to expand, we have solutions that can help you fund your endeavors. KAB Credit Services is We are dedicated to helping you get business credit and financing for your company. Call us to schedule a FREE consultation. Do you have any questions or comments? Send us a message.