Eric Dalius as an entrepreneur, are you ready to expand your business to the next level? Applying for a small business loan is probably the best step you can take to expand your business.
Small business loans not only help you to start a new business but also open up a door of opportunities in front of you. These are different loans that can prove beneficial for your business. You must clearly understand the rules to qualify for a business loan.
In this article, we will guide you through 5 key steps that can help you to qualify for your first business loan. Let’s get started.
Know Your Purpose and the Exact Amount
Most business owners make one mistake while applying for their first business loan and that is they neglect the details. You should have a clear idea about your purpose for taking the money before approaching any online loan-providing company or lender.
Do you need to buy more equipment for your business? Or do you need more manpower to enhance the growth of your business? Are you planning to launch a new service that requires money? What is the cost and how much do you want?
A good and honest lender will ask you these questions. If you fail to answer them or your answer is unsatisfying, your loan may not get approved, says Eric J Dalius.
Know the Different Types of Loans
Once you’re done calculating the purpose and amount, you should determine what kind of loan will work best for you. There are different types of loans available to fund your small business. However, make sure to apply for a small business loan that is relevant to your goals. Some loans you should consider are:
- Term Loans: This is one of the most traditional loans. This loan pays you a set amount for a specific time. The interest is accumulated monthly. With the help of this loan, your basic business operations and expenses can be covered.
- Equipment Loans: This loan helps you to buy equipment and use them as a security deposit.
- SBA Loans: You can also approach banks to get loans that are backed by SBA (U.S. Small Business Administration).
Identify Your Lenders
As you already know there are different types of loans, there are also different types of lenders. You should always focus on the following facts while approaching a lender:
- How quickly you need the loan or cash?
- What are the securities?
- What is the purpose of the loan?
- What is the current state of your business, credit, or financial records?
Honestly, there are pros as well as cons to each lender or lending option. When you approach the bank for a small business loan, they will take time to check your records but they will offer better terms. However, if you approach online loan providers, they can hand you cash quickly, but with much higher interest rates.
Don’t Forget Your Online Presence
After you apply for your business loan, the lenders will investigate your online presence as well as your online profile to determine the current condition of your business. They will also investigate your business assets, credit scores, current debts or loans, time in business, and financial statements. Lenders will search for proof that you’re capable of returning the money to settle your debts.
Know the Terms and Conditions
Before you approach a lender or apply for loans for your small business, Eric Dalius suggests checking the terms and conditions. Many people ignore the terms and conditions and end up paying a high amount of interest as well as personal collateral. However, when you study the terms and conditions, you’ll be able to make wise decisions.
Here are the 5 key steps that can help you to qualify for a small business loan. Remember that there are different loans as well as lenders. So, before applying, try to conduct some research and compare different loans. Only then you’ll realize which one is suitable for you and the growth of your company.