Launching a small business is an expensive undertaking. Chances are you will need to secure a loan to get the business up and running. Getting your first small business loan is easy to do if you follow a few important steps.
Qualifying
The first step in the process is finding out if you can qualify for a small business loan. In general, you’ll have to have a credit score of 680 or above to qualify for a traditional bank loan. If your credit is lower than that you may have to turn to microlenders, something you can usually find through non-profit organizations.
However, the amount of time you have been in business is another factor in whether or not you qualify. To borrow from a bank, your business has to have been open for a minimum of two years. In most cases, you won’t qualify for a loan if you have less than $50,000 in sales.
Choosing A Loan Type
If you determine you can qualify for a loan, the next step is figuring out what type to apply for. The type you need depends on what you need the money for. Most traditional loans aren’t offered to those who are just launching a business, so your best bet is to get a personal loan or business credit card to help you get started.
When you have an established business but need help with daily expenses, a line of business credit is your best option. This can be used to make needed purchases or pay for repairs or upgrades you may not have anticipated needing. But if you want to expand your businesses your best bet is an SBA loan.
Comparing Lenders
Before taking any small business loan, do a comparison of your options. You can choose from banks, online lenders, or even microlenders. Online lenders are your best choice if you need the money in a hurry. They may be your only choice if you have no collateral to put up. Banks are the best choice if you have good credit and microlenders are best if your credit is low.
For more advice on getting a small business loan please contact Revenue Park, LLC.