For businesses of all sizes, establishment and revenue, there’s always room for improvement. Whether you’re just starting out or are already well established, business owners will more often than not need some sort of loan to improve or provide assistance to their business. Depending on certain factors such as interest rate, term, and the amount of principle involved in a loan will determine the entire cost. It’s important and essential for a business owner to have all of their necessary business evaluations to present to the lender, as well as the different loan types.
What to Know
There are a variety of different things you can acquire a business loan for. These things can include emergencies, growth and business expansion, general cash flow requirements, payment of taxes, advertising and promotion, as well as any business associated reason whatsoever. While these things are essential to any business, the process of acquiring the loan deems rather difficult if you don’t know what you’re doing. Of course, having connections and great credit will both be great attributes to being approved for the loan, but there are other resourceful tools that will further you along the loan approval path faster.
If you’re a small business, The U.S. Small Business Administration (SBA) is essential in finding the right lender and loan for you. This is a highly credited and useful tool which provides extensive information, tools, and checklists to make the overall process much easier for those businesses smaller in stature. Though they themselves don’t provide the capital, they do set guidelines for those lenders backed by them. They even offer a free online referral tool to match you with a lender on their website.
Alternative vs. Conventional
If you’re seeking a conventional loan from a business lending bank, you can expect a rather lengthy and strict requirement process before getting approved. It’s also not a secret that banks usually expect a near perfect credit score. Because of the extensive process, getting approved can take up to weeks.
If you end up deciding on the alternative route, the process is relatively much easier due to less documentation required and not needing a perfect credit score. Most alternative lending sources are typically significantly faster than the traditional form of lending from banks, providing approval and funds in a matter of days. Especially if you’re a small business, the approval rate will be much higher at an alternative lending source than that of a conventional. In 2015 the small business loan approval rate for alternative lending was 64%, which is more than 20% higher than those who went with the conventional route.
Knowing Your Business
In order to determine the perfect lending and loan type specific to your business, you’ll need to create some sort of business evaluation. This will include how many supplies you may need, how your business will expand in oncoming years, revenue needed, and other business modules. Before diving into the loan application process, knowing your business and what it needs is crucial for determining what it needs to flourish.
Founder Dinis Guarda
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