What REALLY Matters When It Comes to Getting a Small Business Loan

Are you considering applying for a small business loan?

Did you get to see our blog post yesterday?

Hopefully so, as we showed you some of the downsides that can come with small business loans.

That’s why we recommend establishing a solid corporate credit foundation FIRST before applying for a small business loan.

There are MANY factors lenders look at when deciding to approve a business for a loan. But, here are the 6 most heavily weighted factors…

The Top 6 Most Important Small Business Loan Requirements:

1. Credit (often your business AND personal credit score – unless you know how to avoid that)
2. Cash flow and income (this also impacts your bank rating)
3. Age of business (typically 6 months is the bare minimum – ideally lenders like to see at least 2 years of history)
4. Current amount of debt
5. Collateral (physical assets that lenders could seize if you fall into delinquency)
6. Industry, previous experience & business plan

Let’s say that you took the traditional route and applied for a startup or Small Business loan (like an SBA loan). You have ZERO credit history and haven’t registered to the corporate credit bureaus yet…

Here’s What You Can Expect with a Small Business Loan:

• Fill out the forms…
• The lenders will examine things like: your credit history (often business & personal – typically with a credit of 600+), business tax returns (often they ask for 2 yrs minimum), current cash flow, income, business expenses, time in business, current amount of debt, physical assets, the industry you’re in, previous experience, your business plan, and how much you’ve invested into the business.
• *There may be other application requirements depending on the specific terms of the loan
• Since you’re new it will be very difficult to qualify
• Expect high interest rates (especially with no credit history)
• Payments are often hundreds of dollars or more each month
• It can take weeks to months to finish the entire process
• Even if you get approved – you probably won’t secure the amount you were looking for…
• In the case that you miss payments or default – your interest rates may increase or there may be penalty fees and you can expect your personal credit & assets to be negatively affected.

Before we move on – let’s go back to the topic of interest rates for a moment…

Good Credit, No Credit or Bad Credit – when it comes to financing – you WILL be paying interest (sometimes additional fees as well!)

Each loan has its own terms but typically here’s the ranges you can expect to see…

• Traditional bank loans – 2%-13%
• SBA Loans – 7.75% – 10.25%
• Startup loans – 7% – 28%
• Online loans – 7% – 99%

We recommend doing everything in your power to lower your interest rates in order to save on monthly payments.

Some things that can help lower interest rates are:

Increasing your revenue (“The more profitable your business is, the better your chances of getting a lower interest rate”), raising your company credit score, setting up a line of credit, pay off the loan faster, refinance business debts (if you’ve been in business a while), or approaching alternative & private investors instead of banks.

Whether you’re considering applying for business credit cards, business lines of credit, small business loans or other types of business financing – Corporate Credit Secrets will put you in the BEST position for more approvals and higher credit limits.

If you put this proven method to work for yourself – you’ll learn how to secure $100,000 in credit within 6 months or less. That’s just the beginning…

Learn More About Corporate Credit Secrets

Loans on your mind? Loans can be great but they can also be a burden if you’re not ready for them – tomorrow we reveal what you need to know before applying for a small business loan no matter what stage your biz is in.

Your friends in finance,
Private Wealth Academy