How to qualify for a small business loan?
Your qualifications for a small business loan depend on the lender you are considering. Prepare the following:
1. A plan for how you will repay the funds. This answer will depend on the lender but it is important to know the amount you are willing to pay back on a monthly basis.
2. A plan for how you will use the funds. Have a written plan for how you will allocate the money for your business. Planning to open new office space? Break it down for the lenders, this will increase your chances for a successful loan application.
3. Your business credit score. Know your business credit score and bring evidence.
4. Your personal credit score. Most lenders are looking for a credit score of 700 or higher. They want to make sure you have a strong history of paying off balances and paying on time.
5. Your detailed business plan. As an entrepreneur, you know your business plan is your bible. Your lender will want to see how you plan to grow and scale your business. In order to consider your application, your business must seem viable.
6. Your business assets. Bring evidence of any assets you have in the business. These may be used as collateral for your loan.
7. Profit/Loss and Cashflow Statements. The lender needs to know how your business functions and how profitable it is. In order to prove this, you will need to provide several months (or years!) worth of financial data. Projected financials will also be beneficial for the lender.
8. Debt Statements. Does your business have debt? If so, the lender will want to know.
9. Personal finances and assets. As a business owner, the lender will want to know how fiscally responsible you are. Have bank statements and evidence of your assets ready to share.
Keep in mind: banks have rather strict guidelines when it comes to lending. Online lenders tend to have more relaxed rules. Typically businesses need to have a minimum of $100-200k in revenue, the most desirable business will have been profitable for over 2 years.