Business Loan

Do you need capital to get your business startup off the ground, or does your established business need funds to operate smoothly? If you are considering a loan, there are few things you need to go over before applying. The following 5 questions will help you make the right choice for you and your business:

How much do you need?

The first step is to determine how much cash you need for your business. Do you have plans to expand? Do you need to purchase new equipment? Are you experiencing rapid growth and need capital to support it? Or do you need to boost cash-flow to cover day-to-day operating costs? It is important that you crunch numbers and decide exactly how much you really need so you do not borrow any more than that.

What is the overall state of your credit?

The next big question is what is the state of your credit score? Your credit plays a very important role in your ability to secure a business loan. Take some time to go over your credit history. Are there any transactions you need to investigate before you walk into the bank and they run a credit check? If you do have bad credit, don’t worry. There are still business funding options available to you (just likely not with a bank). You can either spend some time improving your credit score before applying for the bank loan or consider an alternative, high-risk provider willing to work with less than stellar credit.

Do you have collateral?

Because credit and financial statements only show so much, many banks will also require collateral. Credit reports and financial statements show recent payment activity and income history, but it does not predict the future to an underwriter. Thus, the lender may want you to also have assets to pledge as collateral in case there is a downturn in your business’ performance. Types of collateral include real estate (commercial or residential), inventory, equipment, receivables and business assets.

What are your loan options?

Loans are not as straightforward as you might think; there are many different loan options you should explore before deciding. A small business line of credit, for example, provides access to funds when you need them. Working capital loans can help your business through a tough period when you need to increase cash-flow.  In addition, high-risk business loans provide merchant funding to businesses in high-risk industries (that banks are uncomfortable working with).

Which lender is right for you?

After choosing the business funding option that is right for you, you should then compare lenders. Is one of the lenders an award-winning loan provider? Which one has years of experience in helping business secure the funds they need to grow? All in all, make sure the funding and lender you choose will give your business the amount you need quickly, and that their services will help your business thrive.

Business Funding expert, Michael Hollis prides himself on being able to help the backbone of America; small business owners. When he isn’t helping merchants, you’re more than likely to find him scuba diving the California coast or eating at one of LA’s tasty Vegan restaurants.

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