Regardless of how much you want to avoid it, there comes a time when you need to borrow money to finance your business needs. Whether you plan on growing your venture or ensuring survival in tough times, a small business loan can help you navigate your way through the tide.
Although business loans are a great way of acquiring capital and building a sound base, they can be difficult to navigate given the myriad of loan options available. Conventional bank loans, term finance, startup loans, and working capital loans are the various business loans available to small businesses today. Choosing the right loan can become confusing as each one has its benefits and disadvantages.
As a business owner, signing a financing deal that hurts your business ethos is the last thing you need. Imagine signing up for a business loan that breaks the back of your business operations as you struggle to meet the loan requirements.
There are four main conditions that you need to follow to ensure that you’re getting the right kind of loan. In this blog post, we list down these four factors and explain why you need to keep them in mind when looking for a business loan.
Your credit score is crucial to your chances of getting a business loan. Find out your credit score by requesting a copy of your credit report before applying for a loan. Check for the report’s accuracy and contact the bureau if you notice any discrepancy.
A low credit score decreases the likelihood of you getting a favorable loan. A credit score above 700 is usually sufficient for getting a low-interest loan. A credit score below 600 means that you’ll probably have to settle for a high-interest loan.
Determine Required Funding
Once you finalize your requirements for funding, you need to figure out how much is the right amount. Processing a loan takes time, and you don’t want to go through this process multiple times. You also need to ensure that you don’t take out a larger loan than your requirements. In this case, the interest will be high, and it will not help your income to debt ratio.
How Fast Do You Need It?
Ideally, the less urgent your loan requirements are, the more time you’ll have to research different loans and figure out a loan amount. So, search for lenders well ahead of time and start shortlisting loan programs that suit your needs.
Looking for Alternatives
Conventional banks are not the only option for business financing anymore. Today, you can access various companies that specialize in flexible repayment options and offer different financing schemes. Find the right financing company and compare their terms and conditions to finalize the right financing option for you.
Fundwise provides small businesses of Los Angeles, CA, with multiple financing options, such as business line of credit, unsecured credit lines, business term loans, etc. We offer personalized loan services to small businesses helping them scale their business operations.
Apply in 30 seconds for any of our funding options.