Business loans come in various shapes and sizes and serve different purposes. While many business owners harness the benefits of personal loans, i.e. they borrow money in their own name, business loans are a much better idea for many reasons.
Since you’re reading this, you’re probably already familiar with the perks of a business loan, but unable to figure out how to get one. Yes, it can be a little bit nerve-wracking, but it’s certainly doable. Follow this step-by-step guide and you’ll be on the safe side.
Step-By-Step Guide to Getting Business Loans
Create A Business Plan
When you apply for business loans, lenders can reject your application because you don’t have a plan. In other words, you want money, but you don’t know what you’ll be using it for. Are you thinking of enlarging the work space, hiring new people or purchasing more modern equipment? You may want to specify that. Moreover, a proper business plan contains all sorts of financial projections.
How much you’re making now vs. how much you think you’ll make by getting a business loan and taxes, your annual income after taxes, etc. All this looks like trivial info, but a business plan can get you lower interest rates.
Aim for Small Business Loans
Small business loans allows you to borrow a large sum of money over a longer term. Unfortunately, you can’t get a small business loan if your company hasn’t been in business for a couple of years.
If it’s young, like 1-year old or so, you might need to focus on other types of business loans. Start-up business loans are available, so even though your company is in its infancy, so to speak, you’ll still be able to get the funding you require. If you need start-up business loans, online lenders should be your go-to source.
No matter how great a loan looks, you shouldn’t take it before you’ve made sure it’s the best deal you can get. No two loans are the same because no two lenders are the same. Compare interest rates, repayment terms, monthly repayments, the credit score you need to get it and how quickly you’ll be getting the money you need.
There are a lot of business owners who just take the first loan that gets in their way and then regret their action. Loans are dangerous things if handled the wrong way and you can end up with a foreclosure on an important asset.
You can compare loans automatically on the Internet. Just search for a comparison calculator and you can do this in as little as half an hour. It can so happen that you don’t know how to use such a calculator: most of them come with instructions.
Compile the Paperwork
If this is your first loan, you’ll be amazed at how many documents you’ll have to provide alongside your application. Of course, you should put them together as quickly as you can, because if something’s missing from the documents, the lender will postpone giving you the loan. What are the documents you have to provide the lender with? Primarily tax returns (both business and personal), the business plan, statements from your bank (again, both business and personal) and the annual earnings in the business.
In some cases, you’ll need to explain to the lender how you’ll be using the money, either in writing or orally. This happens when you apply to a bank. Online lenders already provide a form you can fill in a matter of minutes. After everything is put in order, you can hand in the application. And from there on, there’s one last step you’ll have to prepare for.
Wait for the Loan
Banks usually send you a letter or e-mail that contains the disbursement date – the date on which the money will be wired into your account. It can take a while, because banks are slow-workers, generally.
The letter will also contain the date on which you’ll start making the monthly repayments. There you go: this is the very last step. If you’ve come to this, you’ve done a great job at getting your business loans.
Getting a business loan isn’t such a difficult thing to do once you know what steps you should follow. This guide is fairly brief, that’s true, but it really contains everything you need to know about the process of getting a loan. Contact NSW Mortgage Corp today. It is a hub for people that are not as familiar with finances as they might want to be and a source of loans if you are eligible for them, obviously.
Getting a business loan essentially boils down to having the proper credit score, the right documentation ready at hand and applying for a loan that suits your type of business.