In business, its success and survival depends on your finances and risk planning. For a small business owner, the challenge is a lot higher. There are plenty of circumstances that will put a small business in financial strain. When these things happen, a small business loan may be the answer.
However, getting a small business loan is not easy and may take a while. In order to avoid the frustration, you should know the required qualifications to get approved. Here are the things lenders often look at to qualify for a small business loan.
Credit Score
Lenders will check both your personal and business credit score to qualify for a loan. You will need a good or excellent credit score to qualify.
Monthly or Annual Revenue
Lenders would like to see your business’ capability to pay them back. Therefore, they will consider your business’ monthly or annual revenue. Each lender will have their own standard for cash flows. So long as your business’ revenue matches their requirements, you’ll have better chances of getting approved.
Years in Operation
The number of years your business is in operation will improve your chances of getting a small business loan. For banks, the requirement is for at least two or three years.
Type of Business or Industry
Depending on the lender, small business loans may only be given to certain businesses or industries. Regardless, lenders will only provide business loans to businesses that are profitable.
Business Plan
It is important that you have a business plan ready. The business plan must state your goals, steps to reach your goals, purpose of your loan, and how you will repay it. The document should demonstrate your business’ capability to cover business expenses while paying for the loan.
However, getting a small business loan is not easy and may take a while. In order to avoid the frustration, you should know the required qualifications to get approved. Here are the things lenders often look at to qualify for a small business loan.
Credit Score
Lenders will check both your personal and business credit score to qualify for a loan. You will need a good or excellent credit score to qualify.
Monthly or Annual Revenue
Lenders would like to see your business’ capability to pay them back. Therefore, they will consider your business’ monthly or annual revenue. Each lender will have their own standard for cash flows. So long as your business’ revenue matches their requirements, you’ll have better chances of getting approved.
Years in Operation
The number of years your business is in operation will improve your chances of getting a small business loan. For banks, the requirement is for at least two or three years.
Type of Business or Industry
Depending on the lender, small business loans may only be given to certain businesses or industries. Regardless, lenders will only provide business loans to businesses that are profitable.
Business Plan
It is important that you have a business plan ready. The business plan must state your goals, steps to reach your goals, purpose of your loan, and how you will repay it. The document should demonstrate your business’ capability to cover business expenses while paying for the loan.