To get approved for a small business loan, the requirements are pretty much laid out for you. It’s no mystery. Go online and check the lender’s qualifications and requirements before you attempt to apply. This will save you a lot of time.
While you’re at it, compare all the lenders that you’re interested in and weigh loans against each other. Which ones do you think will be more manageable and what loan do you think you’ll have higher chances to get approved for?
Small business loans usually do require you to pay a collateral up front and the lender will check your credit score and credit history.
What they’ll be looking for
What they need is proof that you’ll be able to pay off the loan on time. They want to see that you’re trustworthy and that you usually make payments promptly.
And of course, they’ll want to see your business plan and it’d better be a good one.
Here are the things they will mostly likely check when they’re considering your request:
- Assets in the business
- Debt service coverage ratio
- Bank statements
- Financial statements
- Personal credit score
- Business credit score
- The quality of your business plan
- Bank rating (if the loan is from a bank)
Note: A lot of loans are declined because their details get mixed up with another business or there are discrepancies in your records.
So make sure that the information on your papers exactly match your business details – the name, address, tax forms, utility bills, company website etc.
If any of this information changes, say you moved locations or changed your phone number, make sure you update your license and business documents.