Taking advantage of small business lending programs can be a fantastic catalyst for growth. You could use the proceeds to purchase fixed assets to enhance your operations, drive development initiatives, or branch out into international commerce. These funding opportunities have stringent qualifying rules, and lending institutions are extremely judicious about which businesses they opt to work with. Here are some of the most important things you should ask yourself before preparing a successful loan application.
How Are You Doing with Credit?
A business credit score is an important criterion for getting a loan. You should find out about the current state of your company’s credit well before you submit your application materials. That will allow you to dispute any errors which you find. Mistakes on credit reports are more common than you might think, and an erroneous remark on your detailed report could be very damaging to your application.
Checking your score before applying for SBA loans can also prompt you to take corrective action to repair problems that are dragging them down. These remedial measures may include reducing how much credit you use, increasing credit limits, or paying off balances that have been clouding your creditworthiness for years.
How Does SBA Lending Work?
Funding decisions for loan programs that the government regulates don’t fall to your local SBA chapter. Private institutions can be lenders for SBA programs and determine which businesses to offer funds to. However, all participants must adhere to all of the program’s strict guidelines in assessing companies’ applications and determining their preliminary eligibility. They must also structure loan agreements in a manner that is wholly compliant with all of the program’s regulations.
Who Can You Approach for a Loan?
You can apply for SBA loans with a community bank, large banking chain, or online lending company. When you decide which lender to approach, you should try to refine your search by focusing on those that have administrated loans to businesses in your industry. Having a working understanding of industrywide trends and long-term outlooks will make them better able to conduct a meaningful assessment of your business’s greatest strengths as well as your greatest risk exposures.
Ultimately, good planning and organization are essential to preparing a successful loan application. You’ll want to have detailed information about your finances as well as a cohesive narrative that describes how you plan to use proceeds.