About 82% of small businesses fail because of financial problems.
Mismanagement or wrong target market may cause negative cash flow. However, some improvements can turn businesses around or prevent problems in the first place.
But if you don't have the resources to make the changes you want, what can you do?
Approach a lender, of course.
There's no harm in taking out a commercial business loan. Often times, it's the only way to go.
But keep in mind that lenders won't give you money right away. You need to prepare so that you find at least one company willing to give you a chance.
Want to succeed? Let's help increase your chances of success with these nine tips!
1. Calculate How Much You Need
First things first, what do you need the money for? Do you need a working capital? Or do you need to purchase new equipment?
When you've figured out what you're going to do with the money, you can then estimate how much you'll have to borrow.
2. Make a Good Business Plan
A well-written business plan is a key to getting a commercial business loan. At the least, it includes important information about your company, your products or services, SWOT analysis, strategy, and funding requirements.
It should also reflect your short-term and long-term goals, and your plans to achieve them. Lenders will want to look at the profitability of your business and how they will benefit from it.
If you choose us at Express Capital, we do not require a business plan so you can rest easy and focus on your business operations.
3. Build a Credit History
Having an established credit will look good on your application. Commercial business loan lenders will favor those with a good score, but if you have bad credit, you don't need to worry. Companies will usually review the whole application in spite of it.
So how can you establish credit?
One way is to get a secured credit card, which requires a deposit that will determine your credit limit. Once you've built credit, you may qualify for an unsecured card next. Other ways include applying for loans or registering your rent.
If you already have a credit history and it looks bad, start taking steps to improve it now.
Eliminate credit cards with small balances and use only one or two with the best interest rates. Remember to pay bills on time, and don't remove a loan you've already paid off.
4. Update Your Financial Records
Make sure you're up-to-date with your paperwork before attempting to apply. Have you paid all your taxes? Paid your employees? This is the time to complete your income tax returns and financial statements.
Procure a bank statement and your business' profit & loss computation. You may also get a CPA to audit your company's balance sheet.
5. Go to a Reputable Lender
Many entrepreneurs go to banks to fund their capital, but most come out empty-handed. An angel investor, on the other hand, may complicate a lot of things if you're not looking for a business partner.
A nice alternative to both is a direct lender.
They usually have the same requirements as banks, but are more open to high-risk projects. They are also more flexible; don't hesitate to lay out what exactly your needs are.
Find one that can cater to your needs and that's already established. Look for reviews and recommendations, or go with your gut instinct when talking to a representative.
6. Review the Terms of the Commercial Business Loan
Once you begin communicating with one or more lenders, you can review and compare the terms. Consider the maximum amount they can give and how much interest you have to pay off.
Different lenders also have different repayment plans. You can pay daily, weekly, or monthly, and you can complete the term in a year or more.
If you're also working on a tight schedule, know how long their application process takes. Some may take weeks or months, but we can approve a loan in minutes.
7. Know the Lender's Requirements
Ask the lender what documents you need to prepare for the application. They may have additional requirements based on the type of commercial business loan you're planning to get.
The company may demand that your business is already operating for a certain amount of time. Most also have a required minimum amount of revenue. You will learn if you qualify from your company's financial records.
8. Get Your Credit Report
If you run a small, independent business then you need to know your credit score. For larger commercial businesses, you'll need a credit rating. They're different but the bottom line is that they both let you and the lender know how credible you are when it comes to loans.
You can get a credit report for free from three different firms:
This report won't have your credit rating or credit score but it does have everything else. This will include your credit history, number of accounts, and payment history.
9. Gather the Necessary Documents
Aside from the financial records, you also need to provide personal identification, proof of address, business registration, and the application form.
Make a thorough review of the requirements and check twice if you might have missed anything. Don't submit an incomplete application! This may make the process longer or the lender may reject your application outright.
Talk to a representative if you have questions regarding the requirements. And take your time in preparing them.
Ask for Funding Assistance Today
We can help you get a loan! Let our representatives contact you today to discuss your commercial business loan needs. Our process is simple with a half page application and only request bank statement.
Contact us now and let us clear your uncertainties. If you have the requirements, you may even get your funding today!