Launching your own business is an exciting milestone that can have decades of personal and financial rewards. However, starting your small business is often the most challenging part of this lifelong venture.
Chances are that you have an exceptional idea and a detailed plan to pave the way, but if you need a business loan, what are your options? Many entrepreneurs need a loan for new business ventures, and if this is your first foray into starting a company, you may be pleasantly surprised to learn there are quite a few options.
With that being said, this variety naturally fosters a long line of questions. What is the easiest business loan to get? What type of loan is best for a specific company or venture, and how do you get a business loan to begin with?
An expert like Saddock Advisory can answer these questions and help you find the best options for starting your company without hefty interest rates, fees, taxes, and other expenses that might eat into your profits before your business hits its stride.
Meanwhile, the following basic guidelines on how to get a business loan should help when it comes to exploring your options and determining the best next steps.
Start By Checking Your Eligibility
You will likely need a detailed plan of your business structure and likely expenses. However, you’ll also need to take stock of your assets to determine which types of loans (and what amounts) are your best options. So, before you submit a small business loan application, review the following financial factors.
Your credit score – This includes both personal and business credit scores, if applicable. As a rule of thumb, the higher your credit score, the higher your chances of loan approval. (A higher credit score typically means you’ll have a lower interest rate.)
Collateral and existing funds – Some lenders may require some form of collateral or proof of assets in case of default on a loan. This can include savings, but it can also include business equipment, inventory, and other assets that are tied to your new venture.
Your experience – Some banks may require you to be in business for an existing period of time – usually two years – before they consider a business loan. At the same time, online lenders may only have a one-year or even six-month requirement. Do your research and see if there are any caveats when it comes to how long you have been in business, especially if your venture is a brand-new startup.
Annual income or revenue – Take stock of your current income from your business and/or your anticipated income and revenue. Be precise and accurate, as your lender will likely review these amounts as well.
Compare Loan Types
As stated, there are lots of options for obtaining a small business loan, and some of these options include the following:
Online lenders – Online lenders tend to have less stringent requirements than traditional banks, but loan approval rates are typically about the same. In addition, online lending tends to be a faster process, with some loans even receiving approval on the same day.
Traditional banks – traditional banks offer a variety of small business loans and often have lower interest rates and more favorable lending conditions than online lenders or microlenders for qualified applicants. Just know that eligibility requirements tend to be stricter, so make sure you have a great credit score and healthy finances before applying.
Microlenders – Microlenders can include nonprofit organizations or other small lenders that target business owners who typically don’t qualify for more traditional business loans. Eligibility requirements are much less strict, but the amount of funding you can receive may be lower.
Other options – Other options like crowdsourcing, equipment loans, or a business line of credit may also come into play, depending on your unique needs. You may even consider opting for more than one type of loan or combining different loans, depending on what’s best suited for your unique situation.
Obtaining a Business Loan with Saddock Advisory
Securing a business loan is not an easy process, and it’s important not to get locked into a loan that can cause hurdles and headaches once your business is up and running. You want to ensure that you have the number of funds you need, favorable loan conditions and interest rates, and that you can consistently afford your loan payments until you are on solid financial ground.
This is where Saddock Advisory can help.
Reach out to our experts today to learn more about obtaining a business loan. We’ll help you ensure that when it comes to launching or expanding your business, you have all the financial assistance you need to excel now and for many years to come.
