One surefire thing that every successful business is going to need at one point or another is financing. Business loans are great options that can allow you to grow your new business or expand your existing one. To ensure that you choose a business loan that fits your needs, here are three great tips to always follow.
Know Your Options Ahead of Time
There’s nothing worse than backing yourself into a corner when you’re in dire need of financing. This can lead to unhealthy decision-making that destroys the future of your business. Instead, you want to take the time to learn about your different business loan options well before you need to employ them.
Some of the most common loans that you should read up about are working capital loans, term loans, machinery loans, business lines of credit, and small business loans. Each comes with its own pros and cons that you need to be aware of before choosing that financing option for your business.
Find Viable Lenders
Once you research the various types of loans that you can apply for, it’s time to decide what lenders you’ll be using. You should research a plethora of lenders to determine what their eligibility requirements are, the loan amounts they offer, and the documentation that they’ll require. When you take the time to truly assess various lenders, you can get a feel for who you’re most likely to apply with when the need arises.
Be sure to take note of the SBA loan rate that various lenders are offering. According to Lantern by SoFi, “SBA Express is 7.75-9.75%, 7(a) Loan is 5.50% to 8.00% (Variable), 9.25% to 11.25% (Fixed), and Microloan Program is 8.00% to 13.00%.” When you know what the average rates are for the type of loan that you may potentially need to apply for, you can ensure that you’re choosing a lender that offers the lowest rates.
Have Your Documents Ready
The type of business loan that you choose to apply for will have a large impact on the type of documentation that is necessary to get approved for the loan. It’s best to understand the documentation requirements of each type of loan upfront. This way, you can strategically gather the necessary documentation so that you’re ready to apply for a business loan at a moment’s notice.
Ask any business owner what the most difficult part of getting approved for a business loan is, and they’ll tell you it’s documentation. Trying to round up all different types of documents when you’re limited on time can be extremely stressful. When you can try and locate these documents on your own time, you’re better off. Make sure that you keep a digital program of all of your necessary financial and business documents. This way, you can easily upload them to your lender of choice when you’re in need of a quick business loan.
Picking out the right business loan all starts with preparation. When you know the types of loans out there, the right lenders to use, and have your documentation ready to go, it makes obtaining a business loan super simple to do.