Streamline your business loan application in 7 easy steps
Whether you’re just starting out or looking to grow an existing business, securing the right financing can make all the difference to your success. With so much on the line, knowing what to expect when applying for a loan can help you avoid many of the common missteps that can delay and/or cause your application to be denied.
Here are a few simple steps our business lending expert recommend you take to help streamline your business loan application:
Ask yourself, why do I need a loan?
Before visiting with a lender, make sure to review and outline your business needs. Knowing exactly why and how your business could benefit from a loan can help your lender identify the best products and services to match your goals.
Calculate how much you’ll need
Break out the calculator and take some time to run the numbers on your business before you visit with a lender. Clarifying your loan needs with your lender will allow them to asses annual percentage rates (APR), loan terms, loan limits, repayment terms, fees, and penalties. You should also carefully consider your business’ projected costs, the monthly payments and interest, and the total cost of the loan.
Review your credit reports
A vital part of the loan process, make sure to review your personal credit reports for any errors, incomplete information, and opportunities for improvement. Doing so can improve the odds of your loan being approved, while also helping you manage your financial success.
Check your qualifications
It’s important to take into consideration a few common eligibility requirements before applying for a business loan. Our business lending experts recommend analyzing your credit score, annual financials, personal and business debt-to-net worth, net operating income, and more. Depending on your situation, many of these factors could impact your ability to qualify for certain loans.
Compile your financials and gather documents
Before applying for a loan, you’ll need to gather several financial documents, including your balance sheet and income and cash flow statements. Additionally, be prepared to present your business and personal bank statements, state registrations and licenses, articles of incorporation or other legal documents, several business and personal tax returns, and more. For new businesses, a well prepared business plan will supplement many of these documents.
Consider any collateral
Securing your loan with business assets, like equipment or real estate, can increase your chances of approval and help determine loan rates and terms. Take some time to evaluate all your business and personal assets. But remember, these assets can be liquidated if you default on the loan.
Reviewing and processing business loans takes time. That’s why it’s important to submit your application well before you need the funds. Once submitted, be sure to stay in touch with your lender. Provide them with any additional documents they request as soon as possible in order to avoid delays in your loan application. Once the loan closes, you lender will continue working with you to support your business goals.
Building a successful business takes a lot of hard work, time, and energy, as well as the right financial partner. BHFCU’s business lending team is here to help with the expert advice and convenient loan options your business needs. Learn more about your options here.