Updated: Dec 29, 2018
One of the biggest challenges many small businesses face in today is access to affordable credit.
One of the biggest challenges many small businesses face in today is access to affordable credit. This conundrum is partly due to the many changes occurring in the world’s financial regulatory climate. But obtaining outside financing is often paramount to growing or starting a successful business. Credit is usually the main source of funds for basic business necessities like payroll, inventory, and other day-to-day obligations.
Although applying for, and getting approved for a small business loan is usually challenging, there are some simple steps one can take to improve their odds.
Let me share a 3 basic steps to help get that business loan you need:
1. Clearly identify why you need the money.I would advise that you list the capital needs of your business and allocate portions of the potential loan to these needs. This will serve as a financial compass of sorts to keep you headed in the “right” direction as far as capital allocation and capital efficiency is concerned.
2. Find the best loan for your situation.
Compare and select a loan product that fits your unique business needs. Make loan considerations based on the cost and overall terms of the loan offer.
Make sure your projected and current business cash flow can service this debt for the term of the loan even in a slow cycle.
3. Try to get pre-qualified before you apply.
Most banks will clearly list the approval requirements for each loan product on their website.
Make a list of a few banks or micro lending institutions and then contact them in an effort to get pre-approved before you commit resources to pursuing a loan with them. Make sure you have the necessary documents, collateral, credit history before you meet with representatives of the firm.