You need funding to run your business, but how do you know if you qualify? Like personal loans, you must prove you can afford the loan and meet the lender’s requirements. Fortunately, it’s not as hard as most people think to secure business funding.
Here’s what you need to know.
You Need Personal and Business Credit Scores
This may come as a surprise to many people. Your personal credit score helps determine if you qualify for a business loan, but so does your business credit score (if you have one). If you don’t have one yet, don’t worry, just work on perfecting your personal credit score for the best results.
Small Business Administration loans require excellent credit, but there are other options too. If you have fair to average credit, a merchant cash advance may be the perfect fit for your needs right now and it doesn’t require such high credit scores.
A Business History
To prove you deserve (and can afford) the business financing, you must prove you have a business with a history. SBA loans require a longer history (usually a couple of years), and you must prove you are a ‘for-profit’ business.
Other loan options, such as a merchant cash advance, don’t require as long of a history, so you may get financing after only being in business for a short while or are just getting started.
Proof of Income
Of course, the only way to prove you can afford a business loan is to prove you have income. Buckle your seatbelt because this is where the administrative part happens – you must present adequate paperwork to prove you qualify for the loan. Here is a sampling of what you might need:
- Personal tax returns
- Business tax returns
- Bank statements (personal and business)
- Proof of your right to conduct business (permit or license)
- Business plan
- Proof of your experience to succeed in business
Proof of Collateral
Some business loans require collateral or something the bank can take possession of if you default on the loan. This isn’t always the case and there are ways around it if you don’t have any, so don’t let it be the deciding factor in your financing.
Common forms of collateral include:
- Real estate you own
Prove your Business will Last for the Future
Finally, lenders must know you plan to stay in business for the long-term. The only way to prove this is with a viable business plan. Show lenders you are ready to put in the work to not only make your business thrive but to grow.
A business plan should have short and long-term goals plans to achieve them and projected financials for the upcoming years.
Business financing comes in all shapes and forms – there is a loan for everyone. If you don’t fit the stricter SBA guidelines, there are more flexible options to help you get the business financing you need including a merchant cash advance, a business line of credit and more traditional business financing packages.
At United Business Funding we work with businesses of all sizes and circumstances. Call us today at 888-351-3863 to see how we can help.