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Getting a small business loan is easy if you have the qualifications. But there are so many small steps and requirements that go into the loan application process.
To get a small business loan, you need to meet a list of requirements. After that, you’ll need to prepare a laundry list of paperwork. The entire loan application process will require you to do quite a bit of homework before you’re approved for a loan.
So, let’s go over the steps you need to take to get a business loan.
Follow these simple steps to get a business loan.
First, you will need to figure out your needs. Ask yourself a couple of questions:
There are typically only a few possible answers to these questions. So, you will need to find the best kind of loan to handle your expenses.
For the most part, you will be taking a loan to finance an expense that falls into the following categories:
Finding business lenders is easy. But what you need to do is find the business lenders that:
So, the first step is understanding your business loan qualifications from a lender’s point of view. Lenders factor a lot of variables in their decision on whether to approve you. But there are a few things they will all care about the most. These factors are the ones which lenders take the most time on:
Fortunately, most lenders make their minimum requirements quite simple to find. They also make the types of loans they offer very clear. So, you will have to look at a few business lenders that you qualify for and compare them.
If you don’t meet a lender’s minimum requirements, applying for a business loan will be a waste of time. But if you are overqualified, you have the luxury of being able to shop around for whichever lender offers better rates.
Business lenders are easy to deal with, but only after you have a checklist of paperwork prepared for them. Fortunately, most business lenders will need to assess the same documents. Beyond that, they may have their own unique requirements.
Most business lenders will need to look over your:
Once you have all the above, applying for a loan is easy. By now, you’ve:
Now, it’s time to apply for the loan you need.
When you apply for a loan, you will fill in a simple prequalification form. This form will include all the basic information from step one. It will also ask you to provide some simple information. If you qualify with the lender you applied for a loan with, you should be approved. But even if you qualify for a loan, there are a few factors that may still disqualify you, such as:
If you qualify for a loan from the lender, and you aren’t disqualified for one of the above reasons you’ll likely be approved.
So, go ahead and fill out a few small business loan applications. The lender will get back to you soon after you apply. They will send you an offer laying out the terms they are offering you. If you find the terms agreeable, you can submit a full application.
After you’re prequalified for a small business loan, you can send your full application. Once you do this and the lender accepts, the terms of your loan will come into effect.
At this point, you have entered into a formal financial agreement with a business lender. So, you will be sent the amount of money you and the lender agreed to. After that, you will be in debt and have to pay the lender back as per the terms of your arrangement.
Your repayment term is important. If you make timely repayments to your lender, your credit score will increase and you will have access to better terms in the future. If you are slow to pay them back, your credit score will take a hit and it will become harder to secure business loans with good terms in the future.
So, now we’ve gone over the essentials of applying for a small business loan. So, let’s go over the KEY POINTS you need to remember:
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