Back in the day, whether a business was large or small, there was only one choice out there; the banking loan. Owners had to bring their ‘A’ game to the table and hope the bank favored them. Today, the pendulum swings to the other side and there are so many business lending options that it may become overwhelming. The best lending tips for smart business owners are here so an educated choice may be made regarding how to go about securing an option.
Getting Business Lending
- Understand Business Lending Options: There are a few options out there, some may be familiar and others not. Here is a list and a brief explanation of each.
- Small business credit line: This is like a MCA { Merchant Cash Advance}. An agreed upon lending amount with a cap is available as needed. This is one of the best to have as it can help to rescue the business owner from unexpected expenses or seasonal lows and various repairs and that is to name only a few.
- Accounts Receivable Lending: This is a line of credit that relies on the accounts receivable as a repayment. The interest rates on these are varied and having a high enough credit score will help with that facet.
- Working Capital: These loans are typically between five thousand to a cap of one hundred thousand. They are meant to be short-term floats that get a company through seasonal lows and paying salaries and such. This loan is repaid through collateral if the credit score is low.
- Equipment Loans: These loans allow business owners to purchase equipment and offer up twenty percent of the purchase price. These are typically five thousand to five hundred thousand.
These are the top few only just to illustrate what can be done.
- Research Available Lenders: This is self-explanatory. Look for experience and reviews.
- How will available lenders evaluate approval: The typical approval avenues are: Credit checks; cash flow; outstanding loan check; the business assets; business longevity.
- Get Organized: It’s a good impression to have financial statements in order. It also helps make a sometimes arduous process a more seamless one.
- Organize the important business details: bank statements, three years; tax returns three years; business plan including investor pitch helps; financial statements; order the business credit report and check for discrepancies prior to presentation to the lender and project financial gains statements.
- Get laser clear about the amount and use of business lending: The lender will scrutinize the amount that’s requested and the what the purpose is for the loan.
- Decide on a repayment offers: And finally, the repayment offer which is the most important thing to the lender. This can be easy or hard depending on what the business owner has to offer. Try to avoid personal guarantees as much as possible as this will place personal assets in danger.
These are only a few but top points to business lending. At the very least, follow these guidelines, and do your research.