There is so much information online about the business world and it can be intimidating if you have no idea where to start. Here we will discuss how to help you find a lender and streamline your search for a business loan online.
Determine How Much You Need
Before you start to look for loan options, you need to think about the size of the loan that you need. Ask yourself what you are using the loan for and how much you need to make your business happen. If a lender was not able to offer you that full amount, would half of the amount still help you get the job done?
Often times businesses do not qualify for the full amount they want. So make sure that you know going in whether the amount will be a deal breaker or not.
Make Sure You Can Afford It
It is great to know how much funding you need but it is more important that you make sure that you can afford it. You have no idea what your interest rates or terms will be since you have not applied for the loan yet.
You need to take a look at your cash flow and say that you will be able to afford a large loan payment every month. It might best to wait to apply when your cash flow is stronger if you feel this expenditure could strain your business.
Look at Your Credit Report
Make sure your look at your credit report because your personal credit history is an important part of the business loan application. It is best to have an idea of what lenders will see when they verify your credit score and pull your credit report.
You can find a free credit report online when you need to look at it. It is recommended that you pull it before you apply so that you can see what your credit score is and make sure that everything that is on the report is correct. Mistakes on credit reports are common, so keep an eye out for any misinformation because you do not want an error to affect your credit score.
Gather the Information You Need
A great way to save time during the loan application is to prepare the documents that you might need beforehand. Every lender is different and will have different requirements for documents. Here is a list of the most popular requests from lenders:
- Business bank account statements
- Personal tax returns
- Business tax returns
- Balance sheets
- Income statements
- Legal documents (articles of incorporation and commercial lease)
Many of these may have quick access but if not, be sure to acquire them as soon as possible so that you have them on hand in case the lender asks.
Do Your Research
You have done a lot of preparation to help you through the loan applications. You need to ask the lenders the following questions to help you identify who the best lender for you is.
- Are there any industries you prefer to not work with?
- Can I use the funds for anything or are there restrictions?
- What is the minimum credit score you will accept?
- Are your loans paid back daily, weekly, or monthly?
- What is your maximum and minimum loan term?
- Is the process long or short?
- What is your lowest starting rate?
By asking these questions you will have an idea of whether or not this lender can work with a business like yours and if this lender has the type of loan products you are looking for.
Apply Then Compare Your Options
No matter what, you should apply for a few different loan options so you can see where you will get the best offer. It might be hard to evaluate if you are applying for different product types such as invoice financing and a short-term loan. This is why you need to ask all lenders to calculate their costs into APR.
Be sure to ask lenders if they have any prepayment penalties. Some lenders charge a fee if you pay off your loan early. Many borrowers take on a long-term loan assuming they will pay off early. If this is your plan, make sure you can do this with the additional fees.
The Bottom Line
If you have completed the steps above, you have taken the time to carefully identify that this loan is the best course of action for your business and ensure that you are getting the best deal out there. Remember, the more prepared you come to the table the better. This is the easiest way to streamlines your search for a business loan.