6 MOST IMPORTANT BUSINESS LOAN REQUIREMENT

6 MOST IMPORTANT BUSINESS LOAN REQUIREMENT

There is a very wide gap of requirements between the solicitations for personal loans and business loans. Business loan requirements depend solely on the lender, since it involves more risk for them.

Essential fact to know

Hence, a thorough and longer application process is required to ascertain the eligibility of the borrower. It would therefore be required of a business owner to gather financial information relating to them as individuals and their business.

As an entrepreneur, if you’re looking to apply for a loan or have thought of it, you would want your loan application to be considered and accepted. Because the better the application, the greater your chances of acquiring it.

Here, in a bid to assist you with the right armory, we have put together important tips and strategies to assist you in getting the finance you need.

Time in Business

One of the most commonly asked questions by lenders is, “how long have you operated your business?” The longer the duration the greater your chances, since almost 20% of businesses tend to fail within the first year. A long time in business proves that your business has stood the test of time and has a feasible success rate. For best financing option check out https://www.mortgageadvisorygroup.net/the-best-financing-options-for-small-businesses-in-2020/

6 MOST IMPORTANT BUSINESS LOAN REQUIREMENT

Credit Score

Lenders customarily requests and examines the personal credit score of borrowers, especially for small business. But for old businesses, your personal and business credit score would be required.

A stellar credit score of 700 and above confirms your financial health and gives you a wide range of business loans to choose from. Whereas, a low credit score below 600, limits your options.

Annual Revenue

Lenders want to know how much you can make a year. They often require that you meet a minimum level of income per year before being considered for a loan. The higher your annual income, the greater your chances of acquiring a loan. Click here for more information about annual financial reports.

Personal Debt to Income Ratio

Evaluation of personal debt to income ratio might sound counterintuitive, but it is something that most lenders require. Most lenders will consider a high ratio too risky to loan. So, to be on a safe side, a lower ratio is considered the best.

Bank Statements

This is required by lenders to confirm the accuracy of your personal and business accounting documents. They usually request for copies that dates back to a year or even longer. This gives them an idea of how well you can handle the money.

Potential Collateral

Collateral is another requirement for business loan qualification. If you’re applying for a loan, you might want to identify a collateral, as secured loans are always backed up by one. Collaterals are usually fixed assets. The presence of one, gives the lender a sense of security.

With these tips, you should be able to prepare outstanding loan applications that would be considered by lenders for approval. The conditions of the lender should also be taken into great considerations, as they have the final say. Business loans doesn’t always come easy, so keep applying for that loan and never give up!

THE BEST FINANCING OPTIONS FOR SMALL BUSINESSES IN 2020

THE BEST FINANCING OPTIONS FOR SMALL BUSINESSES IN 2020

Business finance is the most integral part of any business venture. In view of the present state of the country, as regarding the coronavirus pandemic the economic situation is tougher than it was a year ago.

1. Are small business owners also affected?

Small businesses have been adversely affected by this pandemic in various ways. Hence, the need to search for financing options that can help grow your business, you can get more help on https://www.business.gov.au/new-to-business-essentials/finance-for-your-business. The search for a proper finance option can be very confusing as there are over 44 different types available to business owners.

 In this article, we are going to review five most common and accessible financing option that will help keep that small business of yours in the running.

2. Personal assets and saving

The most common type of funding for small businesses since time immemorial is personal savings. In this means you put your personal savings and assets are put into business use.

 The risks involved using personal savings are bore by the small business owner alone. Using personal savings and assets in business gives you sole control over the business.

THE BEST FINANCING OPTIONS FOR SMALL BUSINESSES IN 2020

3.  Online loans

Online lenders have become one of the most used financial option for small business owners, click here to see what loans you may be eligible. Securing online loans is the one of the easiest ways of getting loans, because application usually takes only an hour, and can be done from the comfort of your home. Although they can be very expensive, online lenders do not charge prepayment penalties. Usually, most online lender have specific requirements pertaining to them. So, it is advisable to read through their requirements before applying.

4. Microloans

There so many misinterpretations of what microloans should be. Simply put, microloans are loans of smaller dollar amounts typically used to help small businesses grow. Microloans allows individuals with low or no credit score to be able to startup businesses.

Entrepreneurs who have little or no collateral but are however suitable to start a small business. Although most microloan programs usually have restrictions as to what you should and shouldn’t spend the money on, they are still very reliable.

One of the pros of microloans is that compared to traditional lenders and banks, microloans are easier to obtain. Micro lenders even go to extra mile by giving you advice on how to increase their business returns.

 The disadvantage is that some micro lenders usually have inflated interest rate. Undermining this disadvantage, microloans are worth giving a try.

5. Crowd funding

Conventionally, crowd funding works raising funds from a large number of willing people to support your business. With crowd funding, there is no limits to what can be raised as it is done out of the goodness of people’s heart.

Usually, individuals that support small business through crowd funding are entitled to a reward when the business start breeding cash.

This means is one of the convenient because it doesn’t involve any legal process like that of banks and traditional lenders. It also gives opportunity to businesses that their ideas weren’t conventionally accepted to strive.

Clearly, as seen above there are various ways your small business can get funds despite the pandemic. All the methods listed are viable ways with which your small business can be funded. Business finance should be easy to attain after going through this article.

What do banks look at for loans?

What do banks look at for loans?

Small business owners usually do not turn to banks when seeking for loans. Maybe because they do not know what it entails. There are so many reasons entrepreneurs may decide to apply for bank loans.

Reasons for the decision of most individuals application for a bank loan

Some of the reasons may include; business expansion, small business and a myriad of other reasons which are taken into due considerations by banks. But the question, how do you convince a bank to give you a loan for business/personal needs arises and immediately people are crippled with fear.

The truth is, getting business loans from the bank is not usually an easy task, especially for small business owners. Click here for important business loan requirements.

In this post we’ll give details of what a typical bank will expect from a loan applicant. Here are common requirements that are customarily asked for by most banks.

· Purpose of the Loan

As opposed to regular money lenders, the purpose for the loan is very important to banks. The purpose for soliciting for bank loans should be written in details. It gives the bank a sense of security and they don’t feel blindsided.

To gain their trust, make sure your loan purpose is clearly written and is comprehensible. If the bank cannot understand the purpose of loan, your application maybe seen as sketchy. Hence, depriving your application of their approval.

What do banks look at for loans?

· Credit history

Typically, banks would want to review both the credit history of you as an individual, and that of your business. Banks want to know that you are prudent with funds and that is why they request for personal credit history. Learn more for information about your loans and credit.

Before submitting credit history to your bank, ensure that you have personally reviewed it. In reviewing it, you find mistakes and make corrections. This put you steps ahead of whoever reviews your credit history.

· Cash flow history

This is required by banks to check the amount of money coming into a business and the amount of money going out. Positive cash flow increases your chances of qualify for a bank loan.

Banks need your cash flow to make financial projections for your business. They want to be sure that when it is time to repay the loan, you would be able. If they find your cash flow history lacking, you are less likely to qualify for the loan.

· Collateral available to secure loan

Collaterals are an additional form of security for banks. Collateral ensures that a bank will be repaid in full in case of a business default. Collaterals are usually an equivalent of the amount borrowed. Collaterals guarantees that the loan will be paid. Check out more on www.usa.gov/credit

· Character

Are you honest and financially prudent? The answer to this question will go a long way in speaking for you when applying for a business loan. Character allows the bank to make a more subjective assessment of your business’s success and the business agility of you and your partner.

In this light, they consider individual factors that represent strength and weakness for a loan.

Small business owner should no longer be terrified of getting loans from banks. Although the prerequisite for acquiring bank loans might seem formidable, with careful planning and adherence to the tips above you may be able to successfully receive financing.