You might have that brilliant business idea but a big obstacle comes your way: a big capital to kick-start your business. One possible solution is applying for business loans like the online loans at RadCred.
If you are already a business owner, business loans can give you that funding to expand your operations or purchase new inventory and equipment to grow your business.
Nowadays, depending on the business loan type, it could be quite challenging. But don’t worry, if you do not know where to start, here are 6 simple guides to help you get that business loan:
Prepare a solid business plan
A great business plan should clearly convey your goals, mission, and strategy on how you’re going to run the business to achieve your targets. This also means you have a strong financial plan and by this, you can convey and convince the lender that your business will likely succeed.
Decide why and how much of the financing is needed
It is imperative that you already know why you need a business loan. This means what you plan to do with the funds you borrowed. Banks do asses this to determine if the amount you applied matches your needs.
Do thorough research so you don’t overestimate or underestimate the fund you need. If you underestimate, a financial crisis may arise in the future and you may not have enough cash in hand to survive. Otherwise, if you overestimate, the bank may question the accuracy of your financial plan.
Compare and choose the most suitable lending option
The best lending option depends on what you plan to do with your borrowed funds. For instance, if you want to buy new equipment, it is recommended to go with equipment financing.
For start-ups, a microloan or a business credit card would be a good choice. It’s typically easier to get a business credit card if you build a good business credit score.
Make a list of the most viable banks for the type of loan you need and do consider the one with the lowest interest rate with flexible approval guidelines.
Check Eligibility
While it’s easy for you to choose the best bank to apply to, the bank may not choose you if you do not qualify for their requirements. There are some important things you need to keep in mind.
Banks review your credit scores. The higher the credit score you have, the better your chance of approval. Take note that some lenders might also require you to pledge collateral or personal asses that they can take in case you fail to pay the loan.
For your growing business, it’s better to apply if you are already running for at least half a year as longevity could also be a factor. And finally, as a crucial point, you better have good revenues or a clear financial plan to improve eligibility.
Gather the required documents
If you have already checked your eligibility, prepare all the documents you need. Aside from the application form, this typically includes tax returns, business licenses, bank statements, financial statements, and business plans. To be sure you got everything you need, contact the bank or lender before applying.
Submit your application and wait for the good news!
The last step is to submit your application to the bank or lender. They can assess your application online or in person depending on their requirement.
The rest is up to the lender, but if you follow all the above guides, chances are you will be hearing great news.