Learn 7 Tips To Get Your Small Business Loan Approved
The Uniform Commercial Code (UCC)
By signing a UCC, you give the lender a blanket lien that allows them to attach your company’s assets if you default on the loan. The bank may foreclose on a commercial property that you did not give as collateral when applying for the loan.
Personal Assurance
A personal guarantee, on the other hand, is an agreement that you are personally liable for the business loan. If you don’t pay the debt, the lender can’t seize any of your company’s assets, but they can pursue legal action against you.
3. Evaluate Different Lenders
Banks, online lenders, and micro-lenders can all help you secure a business loan. Term loans, accounts receivable financing, and lines of credit are common funding choices.
Conventional Loans
If you need a credit line, term loan, or commercial mortgage and have collateral, you can go to a regular bank. A good credit score will be required. If you go this route, be sure you qualify for an SBA loan.
SBA loans are the result of a partnership between the United States Small Business Administration (SBA) and commercial banks. The lender makes loans to firms, and if they default, the SBA pays 85 percent of the resulting loss. You may be eligible for a loan ranging from $25,000 to $5 million, payable in monthly installments.
Banks provide loans with reasonable annual percentage rates (APRs). Many SMEs, however, may not qualify for the incentives due to poor sales volumes and insufficient cash reserves. Another factor is the owner’s poor credit and lack of collateral. Furthermore, even when qualified, getting sponsored takes time.
4. Determine Your Eligibility
Before granting your loan, lenders want to know that you will be able to pay the required amount. Here are the four main characteristics they use to evaluate you.
Credit Rating
Lenders believe that approving loans for people and businesses with strong credit poses less risk. Individual credit ratings should be above 750, while corporate credit scores should begin at 80.
Annual Income
The lender will look into your company’s trends, particularly its cash flow and revenue growth. Your financial statements for the previous two years should seem good.
