Obtaining a loan for your business is often necessary in order for it to grow and expand. Rates are often high for small businesses because the owners don’t have substantial experience; they have little collateral or both. The process of obtaining a commercial loan is similar to that of getting a home or personal loan. By doing your homework, you can find one with favorable terms.
When looking for a business loan, consider a number of different sources before applying for one. Determine the type of business loan you need with the help of your business plan, and then evaluate your options. Traditional banks and credit unions aren’t your only options. You should also check out online lenders, microlenders and the Small Business Administration for help in finding a loan at a good rate.
Check Your Assets
Just like with personal loans, you need to know the amount and condition of your assets before you proceed with an application. Having a detailed business plan is an excellent way to ensure that you have sufficient assets to continue with the application. The plan should also outline how you expect the loan to help your company expand and bring in money to satisfy the loan, along with additional profits. You should know that environmental factors apply even under CECL, so take that into account when determining the strength of your application. Make sure that you understand and have in hand all documents required by the lender, including financial statements, tax returns, articles of incorporation and collateral, if required.
Consider SBA Loans and Creative Financing
Although the Small Business Administration (SBA) does not technically issue loans, it works with many different lenders that have relaxed loan requirements for smaller companies. Another option is using your personal retirement money to help qualify for a business loan. Called a Roll-Over for Business Startups (ROBS), this option is a lesser-known but viable way to help you secure a better rate on a commercial loan to help grow your business. ROBS financing is also a much quicker way to help you get the funds you need, as it generally takes only a month or two for approval.
Getting the business loan your company requires doesn’t have to be complicated. By taking these simple steps and doing thorough research, you can get a good rate on the funds you need to grow your business.
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