How to Get a Business Loan in a Few Steps
Sufficient financing is an integral part of starting and maintaining a new business. How do we determine what is sufficient and what is not? Unfortunately, there is no easy formula for calculating the exact amount you’ll need, but you can estimate the number of employees you’ll have and their salaries, rent, insurance and everything else that you know is necessary for the day to day operations. As a rule of thumb, I personally add 10% to this figure for the unknown and unforeseen expenses that may catch you by surprise.
Once you’ve come up with a figure, you either have the cash or need to somehow get the cash. If you have it, great; but what if you don’t? Fortunately, there are financing programs for start-ups that you can apply for. You’ll have to do your research and be prepared to go through the tough small business loan approval process. I suggest taking a few steps to better your chances by becoming a borrower lenders would like.
Here are a few easy steps you should take prior to getting a loan:
#1 Think about why you need the loan
Lenders will certainly put this question before you. Do you need start-up capital or do you need the security cushion for the unexpected? Is your business brand new or have you been in business for a while? If you’ve been in business for a while and you need the security, a line of credit like the ones offered by Getmoney.com could be a great choice.
#2 Decide on the type of loan you need
The financing you apply for should be based on your purpose. For example, if you need the money for a one time nonrecurring expense, a business loan is what you should consider. If you intent to use the cash at some point in the future and plan on paying it back quickly, go for the business line of credit. If you are just starting out, you should look into a SBA program. Make sure you have a professional business plan and all your documents ready to go prior to applying. If the SBA loan doesn’t work out, consider using a low interest credit card to get you through the early stages of your business.
#3 Look for a lender whose criteria you meet
A small-business loan may be obtained from various places such as banks, private lenders and online lenders. Once you decide which type lender you are most comfortable with, go ahead and take a look at their qualification criteria’s and apply with the one that suits you the best.
Banks are generally a good option if you have excellent credit, collateral and time for a lengthy approval process. If you don’t have prefect credit, documented cash flow and all the other stuff traditional lenders are looking for, try an on-line lender. They tend to have a more flexible guideline at competitive rates. For example, you can apply for a loan up to $500,000 in just minutes on Getmoney.com. They have flexible guidelines, offer loans to businesses in 750+ industries and only require a 9 months of business history.
#4 Get organized and apply
Once you know what you want and what you qualify for, get all your documents organized and ready. Lenders will generally ask for corporation documents, tax returns (both personal and business), bank statements (2-6 months), bankruptcy discharge papers if you’ve had a bk, and other documents that will prove business sustainability and your ability to repay the loan. Good Luck!