If you’re contemplating starting a small business, you’re likely also thinking about obtaining a small business loan. While some businesses have original seed money that can be used to help initially fund their business, a lot of small business owners need the money that comes from a small business loan in order to get started. However, it can often be hard for an unproven business or idea to get the funding they need. So to help make this process a little easier on you, here are three tips for securing a small business loan.
Know What Type of Financing You Want
One perk for entrepreneurs looking for small business loans is that there are quite a few options out there to choose from. The hard part is knowing what type of financing you need and who the best type of lender will be for you to work with. According to Richard Harroch, a contributor to Forbes.com, some of the options you should consider for your financing should include lines of credit, accounts receivable financing, capital loans, term loans, and credit cards. Depending on the particular situation of your unique business, your needs and conditions for your financing options will vary.
Solidify Your Business Plan
Once you know what type of loan you’re wanting to use, it’s now time to make sure that you’ll be able to qualify for that loan. To give yourself the best chance of securing the loan that you’re looking for, Chad Brooks, a contributor to Business News Daily, recommends doing all that you can to solidify your business plan. When a lender sees that you have a solid business plan that you’ve thought about intently and have planned for, they’ll realize that you’ve done the work necessary to see your plans through. This can make a lender much more willing to work with you even if your don’t quite have a proven track record in your new industry.
Have Great Answers to Hard Questions
As part of the qualification process for securing a business loan, your potential lenders will likely want to know some things about you, your past, and your future plans for your business. While some of these questions will be easy to answer, others may require some homework and forethought. According to Steve Nicastro and Teddy Nykiel, contributors to NerdWallet.com, some of the questions you should plan to have great answers for are what your credit score is, how long you’ve been in business, how much money you’re making, and how you plan to make payments on your loan. How you answer these questions could be the difference between getting your loan and not.
If you plan to apply for business loans soon, use the tips mentioned above to help you get the financing you need.