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There are dozens of questions that pop-up in your mind when you begin to seek a business loan. If this is the first time you are applying for a loan, there may be a few chances that you may get confused if you don’t know the exact procedure before your loan is approved. The following article will provide you with a concise checklist that will help you in obtaining a business loan.
You may use the checklist as it is, or use it as a basis for preparing your own.
1. Identify the specific reason for the loan and how you will repay it
There could be over a dozen reasons for obtaining a business loan. You could be planning to expand your business, or hiring new highly trained staff for value addition to your product. You may also need help fulfilling your purchase orders and paying your suppliers. Whatever, the case may be, you must be specific about your loan requirement – how much do you require and how do you plan to repay the loan. You must, at the same time, also be sure that your cash flows will cover the repayment installments of the loan without causing hindrance to your daily business operations.
2. Write down a definite Plan.
Of course, you know why you need a business loan, and how you plan to use it. But we recommend that you write it down on a piece of paper. You must need to share the plan with the lender at the time of loan processing. You must be able to clearly show that your business will grow as a result of this loan injection. Remember, lenders are reluctant to give out loans to desperate borrowers. You must be confident in your business plan.
3. Timing and tenure of the loan
Identifying the right time to obtain a mortgage is one of the most critical aspects of the whole scenario. Moreover, you must also be sure about how long you want the loan. If you want the loan right away, you need to prepare the documents immediately. If you want the loan for only a little while, you should seek out a short term loan. If you are clear about these two points, you will have no problem conveying the same to the lender. If you’re still uncertain, Quick Business Loans by Fast Capital 360 will allow you to understand these aspects of the loan in a much smoother way.
4. Credit History
The first thing a lender sees before processing your mortgage is your credit history. Some agencies provide you with the assistance of managing your credit history for prospective lenders. However, if your credit history is terrible, there is very little chance of you getting a loan. It means that you should retrieve your credit report and review your report thoroughly before submitting your loan application.
5. Choosing the right lender
The next step is to select the best lender that would suit you. A lender that has worked with your peers should be your first choice since he will understand the intricacies of your business and your financial requirements. Moreover, you should also decide what kind of loan will suit you best. Both of these factors will affect the rate of interest and repayment terms.
6. Complete Documentation.
No matter which lender you choose to work with; you will be required to submit a set of documents with your application form. It is advisable to start gathering and arranging all these documents beforehand. Also, prepare photocopies of each certificate, and get them notarized. You will also need to disclose if there is any lien on your plant and equipment or property. The lender will also want to review your financial statements for at least past three years.
The Final Word
The next step involves filling out the loan application form and submitting it to the bank. Once you submit your application, the bank starts processing it. You may be called for an interview with bank officials before your loan is approved and if all goes well, you will receive the amount in no time.