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    How to get approved for a small business loan

    Assets in the business

    The reason why they check this is because in case you fail to pay off your debt, they have something else to collect: your declared assets.

    If your assets prove to be insufficient, some lenders usually accept personal guarantees. If you do have some assets, it’s better if you don’t give them the personal guarantee.

    You don’t want your personal assets to be seized when things go sour.

    Debt service coverage ratio

    The reason why you’ll be asked to provide financial statement is so they can calculate your DSCR. You want this amount to be less than 1.25 to 1.35 times what you spend – that’s counting the loan you’re applying for.

    Some other factors they might look at are your fluctuations in income, tax obligations and how viable your niche is.

    Don’t expect to be approved for a loan if your DSCR is less than 1.0. That means no money is coming in and you’re not financially sound enough to handle the debt.

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