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How to Get a Startup Business Loan for Small Business
Securing start up loan for your business can make it grow, but the process involved in obtaining the loan can be complicated. Mistakes sometimes may be expensive, and they can equally cause your business loan request to be totally rejected. If you really need to get loan for your startups, then read this post carefully for what you are expected to do are going to be exemplified explain.
EXPOSED! Where And How To Get Loans To Start Business
It is never an easy job to secure loan for startup business, especially when the world is experiencing financial crunch here and recession there. Securing loan for business startup is now a major hurdle and challenge facing some businesses, basically, maybe as a result of tight lending standards set by banks.
Whatever the reason may be, to secure loan for your business in such a stress-free and honorable manner, you can rely on the following tested and trusted steps:
Step 1: Find a lender
If I said a lender, I mean the bank that is readily available to loan out the amount of money you are interested in securing. The banks are known for offering the traditional loans that are within their ambit.
Be informed that not every bank offers loan to small startups as such, you need to make inquiries so as to find one. You have to go out and find a bank that fit for your loan needs. Choose and decide wisely which of the banks will suit and fit your startup business for the proposed loan.
Step 2: Understand Your Credit Score
Generally, “credit” is required to get a loan. This shows that you’ve got a record of borrowing and repaying loans. Your position on the credit score is one of the factor that will determine whether or not you are qualified for a particular loan scheme.
Lenders take a look at the personal credit spectrum scores as a way to determine the credibility and reliability of the principals who want to secure the loans.
It is therefore imperative for you to know what the lenders will require for and how the credit scores will be weighed whether they meet up to the expectations.
In the same vein, you may be thinking that how can you get a loan if at all you don’t have any credit? The fact is that you need to start somewhere, this actually means you have to borrow less and pay more.
Once you build a strong and heavy credit spectrum history, lenders will be ready to give you loan- even more with better rates.
Step 3: Check if You Are Qualified
To back your credit score up, majority of the lenders will put into consideration how far has your business being in existence and operation. Your small start up business must have been operating for at least one year for you to qualify for most of the online loans for the small businesses and at least two years of existence and operation to be fit and qualify for most of the bank loans.
Therefore, it is very crucial you ensure that your startup businesses has been operating for more than two years before you file out any application to secure a loan.
Step 4: Fix Your Credit File
Another thing you need to do to secure loan for your startup idea is too ensure that you fix any absurdity in your credit file. Take a thorough look through your business credit history to check if there are any lapses that lenders will see and complain about when you ask out for a loan.
Check and ask yourself if you actually look attractive as a borrower. Be sure to mend and fix any mistakes you find therein, as they are capable of hurting your chances of securing a good loan.
Step 5: File Out Your Application
It is high time you file out an application to seek or apply for the loans that suits your financial needs. When filling out the loan application, you are thereby required to provide an accurate information about your finances and even, yourself.
For instance, you will need to write your full details with genuine identification, provide a valid address plus Social Security Number and you will supply the information regarding your income.
Though it depends on the lender, you will need to submit the following documents together with your application:
• Your business and personal tax returns.
• Business financial statements and projection- Profit & Loss, Cash Flow and Balance Sheet Statements.
• Business legal documents e.g. all the articles of incorporation, franchise agreement, commercial lease, if any.
• Business owners' resumes.
Step 6: Go Through Underwriting
After your application have been submitted, the banker/lender will examine your application as a potential borrower. This may be sooner than expected or it may equally take few weeks.
For example, Mortgage loans needs an extensive documentation, like the bank statements, pay stubs to prove the ability to repay the loan.
During underwriting, lenders are going to pull your credit or use a credit spectrum to review your application. They may occasionally call you and ask you out to shades more light or prove something that you claimed in your application - that’s definitely a good sign.
When lenders ask you for details on your submitted application, it means they are taking the underwriting so serious and they are likely to offer you a competitive loan rates. You can however, make this process easier and simpler on yourself by ensuring that you get everything in order before you file the application or apply for the loan.
Step 7: Wait for the Reply
Having filed and submitted your application for the loans, you are to wait patiently for the bank you applied to give you feedback. Expect to get an answer within 2 to 4 weeks. Check your status in each week if at all there is any information for you.
It is typical and common that the bank may need additional document from you hence, checking your status will enable you to have up-to-the minute’s information and happening regarding your loan application, either approved or declined.
READ: How To Find The Best Small Business Loans
Finally, if you follow the above steps involve in getting a loan for your startup business couple with an appealing collateral, the bank wouldn't help but to give you the required loan at an affordable rate.