Today we will cover some of the basic information that covers all or most of the small business loan types you will run into when trying to apply for funding.
Types: There are several varieties of small business loan, which type you use depends on you circumstances. Business cash advances are fast and easy to get, but can be very expensive. On the other end of the spectrum, secured traditional bank loans can be difficult to be approved on, but offer some of the lowest interest rates.
Getting Ready: So how do you prepare your company to apply for a loan? You must first try to cut all of your operating expenses as much as possible, this will increase your revenue to expense ratio, which is a strong factor in determining how much you are authorized to borrow. Next, you should create formal business plan that outlines in details all of your future expenses and revenue. If you require assistance with this you should contact your local chapter of the small business administration. They can assign a consultant to work with you one on one in creating one.
Applying: Once you’ve prepared all that you can, you should begin the application process. Once again the SBA is a great resource for finding lending institutions that will lend money to companies like yours. They should be able to walk you through what to expect. Once you have a short list of likely lenders you will want to contact them to see what additional paperwork they will need you to furnish to get approved for a loan.
Picking a Lender: So once you now the criteria required of you from your short list, how do you pick which one to apply at first? This should largely be a function of cost, but you should also consider how easy a company seems to deal with and what their policies are in the event that you run into problems repaying.
Finalizing the Agreement: Once you feel comfortable with the conditions of a loan you are approved for you will want to finalize the agreement. This is the appropriate time to ask any unanswered questions, make sure you understand everything about the agreement before signing anything.
You will want to first prepare your company by cutting your expenses and writing a detailed business plan. Once you’ve done that you’ll want to find an appropriate lender for your circumstances. Finally, you’ll want to make sure you understand your loan agreement before signing.