Steps to Take Before Getting a Small Business Loan
No matter how high your credit score is, you cannot very well go into a bank and demand a business loan. Instead, you need to do your research, get your finances in order, and fill out some paperwork before you can get any type of loan. Below are some of the most important steps to take before even walking into a bank.
Do Loan Research
While you can walk into a bank and ask for advice on which type of loan will best fit your needs, a bank is not likely to pick out a loan for you. For this reason, among other reasons, it’s best to do some research of your own beforehand. Not everyone qualifies for the same types of loan, so it is important to keep that in mind.
If you are a small business owner, then it is a good idea to check out which sba loans your business qualfies for. These loans can rancge in amounts from tends of thousands to millions. Of course, how much you will be able to take out wil depend a lot on your business’s financial history and credit score.
Pick a Lender
Once you know which loan you want to take out, it’s time to pick a loan provider. While you may be able to get a better interest rate if you stick with whatever bank you usually use for your personal and business loans, that is not guarunteed. Remember that it is okay to shop around. After all, getting a lower interest rate or better loan terms is more important than having loyalty to one specific bank or chain.
It is also important to check to make sure that your chosen lending instituion offers the kind of loan that you want. Not all banks are required to offer an sba loan. However, the sba does have relationships with certain banking chains, so knowing which banks work with the sba can be helpful.
Get Paperwork in Order
Make sure that you have all of your business’s financial records in order once you have a bank picked out. Any lending instituion is going to want to have proof of any profit and expenses your business has. Typically, having records that go back at least a few years (or until the start of your business if the business is new), is best. When in doubt, ask the bank what records they want.
Before trying to get a loan, make sure you take these three steps. Doing this can make the lending process go so much smoother and can save time and money in the long-run.