Getting A Small Business Loan
The approval process for a small business loan can be a daunting task.
After helping thousands of business owners, we’ve collaborated the top 25 tips to getting a small business loan. To find out more about different types of business loans you can go here: http://venturycapital.com/business-loans-for-bad-credit
Here they are:
General rule of thumb: the longer you’re in business the more likely you are to get a good rate and term loan.
Lenders prefer to lend to healthy businesses. Decreasing bank statements can be a sign of instability.
NSF’s and Bounced Checks are a big “no-no” in lending
When taking on debt financing, it’s crucial to be able to get a return on that investment
Credit is always a factor in a business loan. Understanding credit for a business loan is essential.
Putting together a use of funds statement is a big part of writing your business plan.
Sometimes lender require tax returns, P&L’s, Balance sheets etc. It’s best to have these close
Be honest. They’ll find out if you’re lying and kill the loan right there.
Time in business is a biggie. No lender will lend to a business that cannot show steady consistent deposits
for atleast 6 months. Best shot is after a year.
If you take $500 out of an ATM at your local casino, underwriters will see that and it will NOT help.
Just stop at your bank on the way! (Ask us how we know 🙂
Large balances = large loan amounts
The art of a letter of explanation can go far with underwriters.
Keep the bank accounts clean. Most businesses have an operating, payroll, and money market account.
Process all payments through the operating account.
I know this sounds silly, but your application is the first impression you have on the underwriter. Make sure you write nicely
Don’t ask for $1,000,000 if your company does $10,000 a month. It won’t happen.
Industries matter. Check to see where your industry falls in the risk category or ask a professional.
Better have a structured settled in place if you have these.
GAR can have bearing on underwriting. Make sure your stated GAR matches your bank statements.
Example: Don’t put a GAR of $1,000,000 if the banks you submit are $25,000 a month.
You want as many as possible. Instead of depositing all checks on one day, go to the bank multiple times.
Borrowed money needs to have a purpose, and the underwriters are more likely to consider the business owner with a plan of action.
Many companies offer one lending program because they believe in the model. Ventury offers several lending programs.
This relationship enables your business to have access to many other financial vehicles that fit your model
Keep your daily ending balances above 10% of what you deposit.
Predict future business needs and ask for financing when bank deposits are high, not when business has fallen.
SBA loans have best rate but take 3 months to close and require over 15 documents. Other loans don’t have the best rate but require 1 or two documents.
Lenders see consistent credit card sales as a sign of stability.